Do we qualify?

[whoops08]

Hello. I'm happy to have found this forum. We have an appt. with a bk attorney next week and we feel anxious.

We have over $200k in unsecured debt, which was accumulated over the past 5 years to start businesses that failed, and due to layoffs from jobs 5 years ago. We also have put money on our credit cards to fix up homes to try to sell but then the homes didn't sell. We don't buy luxury goods or do anything luxurious. My husband and I both have jobs and we have three children. We have a good income but when we did the means test based on having our primary residence we were -2500 per month.

Will the UST question our $200k in unsecured debt? Will we be forced into 13?

Our debt is now accumulating because we use our cash to make min payments on our bills and then use our credit cards for everything else like food and gas.

We were trying to do the right thing and pay off the debt on our own but we just keep getting deeper and deeper into debt.

We are trying to sell our home which has been on the market for 9 months and is losing value as we speak.

Any advice would be appreciated. Thank you!

[Needing Help]

It is my understanding that it's not the amount of debt that you have that determines a 13 or 7, rather the disposable income. So, if you find yourself -$2,500, I would assume a chapter 7 would be no problem.

Is your $200K business related, or all consumer?

[Phillymanhere]

First thing: call around, do research and go visit 4 or 5 bankruptcy attorneys. They usually give free consultations. Run the details of your situation by them, and you'll get an idea of how your case will be viewed by the bk court in your area.

Having 200K does not disqualify one from a chapter 7. It's not based on how much you owe. What's your income now? ... Do you qualify for the first part of the means test?--Is your income (household) below the median for your state? You only get kicked to a 13 if the trustee thinks you have some extra money to fund a 13.

There are people who've come here with huge huge sums of debt. Yes, someone might ask how you got into debt. The information you supply here seems legit. A failed business venture (even one based on foolish calculations) does not disqualify you from Chapter 7.

Losing money in business--that's totally normal. Nothing illegitimate about it.

[whoops08]

First thing: call around, do research and go visit 4 or 5 bankruptcy attorneys. They usually give free consultations. Run the details of your situation by them, and you'll get an idea of how your case will be viewed by the bk court in your area.

Having 200K does not disqualify one from a chapter 7. It's not based on how much you owe. What's your income now? ... Do you qualify for the first part of the means test?--Is your income (household) below the median for your state? You only get kicked to a 13 if the trustee thinks you have some extra money to fund a 13.

There are people who've come here with huge huge sums of debt. Yes, someone might ask how you got into debt. The information you supply here seems legit. A failed business venture (even one based on foolish calculations) does not disqualify you from Chapter 7.

Losing money in business--that's totally normal. Nothing illegitimate about it.

We have absolutely no extra money. We are living off our credit cards. We did qualify for the first part of the means test. However, our median income is higher than what it is for the state of California. We can't say exactly how we got into debt because we don't really have any material things to show for it. We lived on credit when we got laid off from our tech jobs and then started our businesses by funding it ourselves on our credit cards b/c we could not get a loan due to being unemployed. One of our businesses failed and luckily our second business is somewhat successful.
Yes, we have taken a couple of vacations and bought things for our home but nothing extravagant especially over the last 12 months.

We are so worried, each month we go deeper and deeper into debt. Should we stop charging on our credit cards completely? Does our bank debit/visa count as well?

THANK YOU!

[Cali]

I just filed today, C7. We were over the median for a family of 4 in CA. We were eligible after we did Schedule I & J.

I also have a lot of unsecured debt, not as much as yours but enough for it to be questioned by the UST. If it comes to that, I will probably have to produce bank statements and CC statements for the past year.

If you can't afford to pay the minimum you need to stop paying them. You can use that money to pay for your basic needs.

[whoops08]

I just filed today, C7. We were over the median for a family of 4 in CA. We were eligible after we did Schedule I & J.

I also have a lot of unsecured debt, not as much as yours but enough for it to be questioned by the UST. If it comes to that, I will probably have to produce bank statements and CC statements for the past year.

If you can't afford to pay the minimum you need to stop paying them. You can use that money to pay for your basic needs.

Thanks! We are also in the SF Bay Area, How did you find your BK attorney? There are so many that we are having a difficult time picking the few we would like to interview. Good Luck on your CH.7

[Cali]

I am in SoCal.

I picked 3 attorney's from researching online, Pacer and from a recommendation.

Thank you. I am looking forward to closing this chapter of my life.

Thanks! We are also in the SF Bay Area, How did you find your BK attorney? There are so many that we are having a difficult time picking the few we would like to interview. Good Luck on your CH.7

[JRScott]

Well it is likely with such high debt that the UST will get involved and they will dig to try to find what you spent the money on most likely. They mostly be looking to make sure you didn't hide any assets. So long as your honest and forthright you should be okay, however do expect pressure from the UST.

As others said make sure to see 3-4 bankruptcy attorneys, considering the level of debt it would be better to pay an attorney than to file pro se most likely.

Also stop paying the credit cards.

Go to a cash only policy. Pay food, transportation, utilities and housing before putting anything towards the credit cards. With what remains after the basics there is 1 of 2 things you could do.

1. Divide the remainder evenly among all cards and mail them a paper showing how you divided the disposable income equally among them all. They'll call and harass you because you aren't making minimum payments in most cases, however they will accept the lower payment. (plus the paperwork fills up their computers.....)

2. Start with the smallest bill and apply as much as you can to it until it is paid off. Then move to the next smallest etc.

I hate to mention this but I think its important, if your home is more than 25% of your take home pay a month then it might be necessary considering to sell it and get a smaller or less expensive home as well to make sure you don't end up in the same mess later.