Attorney says we don't qualify for 7 and must do 13

[whoops08]

We met with our first attorney today and he said that our incomes are too high to file CH. 7 and said we have to do CH. 13. He said that in Ch. 13 we can put our two homes into it and get rid of the mortgages and all unsecured debt as well as a car payment. Our monthly CH. 13 payment he said is estimated to be $4500 per month. This covers $200000 in unsecured debt and a car payment and some back taxes. Is there a way to lower the CH. 13 payments?

Should we see another attorney to see if we can qualify for a Ch. 7. It seems like there are lots of people in our same situation who qualified for 7.

Please help.

Thank you!

[sunshine mary]

I would check with a couple/few more attorneys and see what they say. Our first 2 said CH 13 and last 2 said CH 7 and we filed CH 7 13K over the median and are awaiting discharge.

[justplaintired]

Your income must be very high to afford a $4500 payment. I would guess the attorney you met with could be right, but never go with the first attorney you meet with. Go visit a few more. They base on it on your income along with your living expenses.

Good luck!

[HHM]

you should visit other attorney's, but based on what you have shared so far, I bet your responses will be the same.

1. What is your annaul income?
2. How many are in your household?
3. Is the second home an investment property or a vacation home.

The attorney may be suggesting a chapter 13 because even if you qualified for a 7, a 13 could still be in your best interests if it allows you to stripe off a 2nd mortgage or HELOC from your homes. (which you can't do in a 7).

[whoops08]

you should visit other attorney's, but based on what you have shared so far, I bet your responses will be the same.

1. What is your annaul income?
2. How many are in your household?
3. Is the second home an investment property or a vacation home.

The attorney may be suggesting a chapter 13 because even if you qualified for a 7, a 13 could still be in your best interests if it allows you to stripe off a 2nd mortgage or HELOC from your homes. (which you can't do in a 7).

Our annual gross income is $230,000.
Our monthly expenses to cover both mortgages, unsecured debt and two cars plus daycare for three children is about $25,000 per month. We also pay our taxes monthly for my husbands business and mine comes directly out of my bi-weekly paycheck. Every month we are negative about $3000. There are five of us total in our household and we pay about $1800 a month in childcare. Our unsecured debt min. payments are $3500 per month and never gets paid down.

Our second home we bought 10 years ago as a vacation home and bought is for a really great price. Then we put some money into it to fix it up and now it's work about $100,000 less than we purchased it for. We are able to rent it about 60% of the time however the rental income does not cover the mortgage on it.

We are buried in debt. Our debt is mostly from 2 business start ups. one failed and one good.

We feel like a 7 might be better but in a 13 the attorney we met said that we get to keep all of our assets and we get to turn in our mortgages for both homes and all the unsecured debt. Is this true?

He also said to stop paying all of our bills except for the things we want to keep such as our car. Although he did say that he thought we should put or car loan into the 13 and that we would still be able to keep the car.

He said that the money that we would have normally spent to pay the montly bills we should just hold on to.

Thanks for any suggestions!

[MajorMike]

I would say $4500 far outweighs paying $25K per month, wouldn't you?

[JRScott]

Yeah with 230k I seriously doubt you can get into a 7. However it is in your best interest to see 3-4 more lawyers in your area.

If you are paying 25k a month that would require 300k annual income. Like most of us you've spend more than you make, you're not alone we've all been there. If you remove the unsecured debt/credit cards how much are your expenditures a month?

[HHM]

yep, you are not going to be able to file chapter 7.

That attorney sounds like he gave your fairly standard, reasonable, advice.

[Flamingo]

The saying goes, "The more you make the more you spend" and how true it is and was for us. Been in your shoes but we made about $100,000 less per year. When the job loss hit for my husband in 2001, we lost 70% of our income and were drowning in debt. As for us, if you file a Chapter 13, the lifestyle change is going to hit you hard during the first several months after filing. However, you don't have the income loss so it will be different for you. We too could not file a 7 due to our income and we wanted to keep our house which had a good bit of equity in it so we filed a Chapter 13. It was hard but in the end worth it just to keep the house.

Best of luck to you and see several attorneys as to your situation. Best of luck to you!

[deafbroke]

It might be best talking to another attorney. Advice on here seems good mosto f the time but we are not attorneys who do this as a job and they will give you the best options. Seems like with that much in negative cash flow a month you would qualify. not sure. Consult with a few more attorneys before deciding what to do. If your husband is self employed ask attorney about filing business bankruptcy. Might have better options that way.

DB

[Cali]

I agree with others the income is too high for a 7, but a 13 wouldn't be all bad. At least you get your debt taken care of.

[JRScott]

Oh wanted to add why you need to see 3-4 more lawyers (I"m 99.9% sure you can't do a chapter 7). The reason you need to see is to check on rates and how well you get along with them. This is a person if you do a Chapter 13 you'll be dealing with for 5 years off and on, so you want someone you can get along with and can trust.

Chapter 13 is not the end of the world and can help you. lrprn is in one and there are others that have successfully completed one.