Third Attorney says we qualify for 7 not 13

[whoops08]

We are so confused. If anyone can help us figure this out it would be much appreciated....

Today we met with a third attorney. He said that we don't qualify for 13 because our secured debts are above the limits. However we could do a 7 because with the 2 mortgages for our first and second home as well, as car payments and day care and all other "necessary" expenses we pass the 7 means test. ( put it into this program)

He said that even if we do a 7 we can reaffirm our two car payments to keep the car and then surrender the homes even if they are included on the means test. Does this sound right? Also, he said that since we now know that we qualify for 7 we should stop paying all of our bills including mortgage and cc payments that we know are going in to the BK. So my question is: What happens to the money that we would have paid for all the mortgages and credit cards payments each month, do we keep them in our bank account? Our mortgages plus min. montly cc payments were a total of $12,000 per month. Won't it look strange going into a 341 meeting with this money on hand? Do we spend it on other things, like paying down our car or buying a different car? should we prepay daycare? or taxes?

He said we should file at next week and we will have our 341 meeting in 30 days and hopefully be discharged in 3-4 months.

The only other question is that we have my aunts money in a cd account in our name. The money is not ours and has never been, we didn't make any of the deposits or recieve any of the interest payments. We can't afford to lose this money for her as it is all she has for retirement. The attorney says that we should transfer it to her and then disclose it in the BK. We risk losing all to 1/2 of it but the trustee may not take it...

THANK YOU THANK YOU THANK YOU

[arkienurse]

We are so confused. If anyone can help us figure this out it would be much appreciated....

Today we met with a third attorney. He said that we don't qualify for 13 because our secured debts are above the limits. However we could do a 7 because with the 2 mortgages for our first and second home as well, as car payments and day care and all other "necessary" expenses we pass the 7 means test. ( put it into this program)

Can't help with this one, not sure what the limit is, and if you can include expenses on things you are going to give up.

He said that even if we do a 7 we can reaffirm our two car payments to keep the car and then surrender the homes even if they are included on the means test. Does this sound right? Also, he said that since we now know that we qualify for 7 we should stop paying all of our bills including mortgage and cc payments that we know are going in to the BK.

If you know you are definitly going to file bk, you shouldnt be paying your cc anyway, whether 7 or 13. If there is even the slightest that you will keep your home, I would keep up with the payments, as you can't file a 7 and keep your home if you are behind on it, same with cars.

So my question is: What happens to the money that we would have paid for all the mortgages and credit cards payments each month, do we keep them in our bank account? Our mortgages plus min. montly cc payments were a total of $12,000 per month. Won't it look strange going into a 341 meeting with this money on hand? Do we spend it on other things, like paying down our car or buying a different car? should we prepay daycare? or taxes?

did you really mean to type 12,000 and not 1,200? anyway, stock up on groceries, clothing for the kids. Get any medical work done that you are needing, new glasses if they are needed. Save receipts for everything you buy. I would not pay down your vehicles, as this could be construed as preferential payments to a creditor. prepaying a month or 3 of payments may be ok, though.

He said we should file at next week and we will have our 341 meeting in 30 days and hopefully be discharged in 3-4 months.

The only other question is that we have my aunts money in a cd account in our name. The money is not ours and has never been, we didn't make any of the deposits or recieve any of the interest payments. We can't afford to lose this money for her as it is all she has for retirement. The attorney says that we should transfer it to her and then disclose it in the BK. We risk losing all to 1/2 of it but the trustee may not take it...

This scares me the most for you. If the account is in your name, the trustee could take all of it. If you transfer the money to her name, this could be looked upon as an attempt to hide assets, and trustee could take it all back. I really believe I would consult a few more attourneys and see if any of them agree with this one.

[Phillymanhere]

Wow,

I completely understand why you would feel confused. But you've got a lot of assets there and so the case seems a bit complex.

A couple of points and hopefully others with more experience will weigh in.

1.) is it 12K a month left over or 1200?

2.) either way you won't have all this left over in time because you will have to pay rent somewhere when you move.

3.) If I were in your situation (not saying you should do this but if I were in your situation), I MIGHT visit still several more attorneys. I'd definitely make calls until I found several super-smart ones and get their view of things ....

4.) How impressed were you by this third attorney compared to the previous two? .... did he seem to know what he was talking about? ... did you trust him? feel "safe" with him?

5.) The one thing that jumped out at you is that he was recommending that you file immediately .... can you give his logic? ... I talked to one lawyer over the phone, and he was trying to rush me. When I said I wasn't close to making a decision without meeting with other attorneys and discussing things with some trusted friends, he got really snarky. The guy was clearly looking for some quick money--at least that's how I judged things. He was smooth for the most part until we got to the "come in today and we'll get this started." NONE of the other attorneys I talked to pressed me like that.

[whoops08]

cost of ch.7

Wow,

I completely understand why you would feel confused. But you've got a lot of assets there and so the case seems a bit complex.

A couple of points and hopefully others with more experience will weigh in.

1.) is it 12K a month left over or 1200?

2.) either way you won't have all this left over in time because you will have to pay rent somewhere when you move.

3.) If I were in your situation (not saying you should do this but if I were in your situation), I MIGHT visit still several more attorneys. I'd definitely make calls until I found several super-smart ones and get their view of things ....

4.) How impressed were you by this third attorney compared to the previous two? .... did he seem to know what he was talking about? ... did you trust him? feel "safe" with him?

5.) The one thing that jumped out at you is that he was recommending that you file immediately .... can you give his logic? ... I talked to one lawyer over the phone, and he was trying to rush me. When I said I wasn't close to making a decision without meeting with other attorneys and discussing things with some trusted friends, he got really snarky. The guy was clearly looking for some quick money--at least that's how I judged things. He was smooth for the most part until we got to the "come in today and we'll get this started." NONE of the other attorneys I talked to pressed me like that.

We don't actually have the $12k left over because we have tons of other expenses with three children, our daycare cost alone is $2500 per month, over the summer it is about $3,000 because we have to put our third grader as well in camp...without daycare we can't work. We live in a very expensive part of california, i.e our gas is $4.99 per gallon. We have business expenses and taxes that take up more than half of our income each month. We are negative $2000 per month.

The attorney quoted us $4500 to do the CH. 7. Is this what it normally costs? It felt a little high...but I guess if he knows what he is doing it is worth it.

thank you!

[Phillymanhere]

I'm confused. If you are 2,000 a month negative, then there's no way you would qualify for a chapter 13. You wouldn't have any money to pay anyone.

The question is, what do you have left after you list all your expenses on the Schedule J form? The goal here is to stay within the IRS recommended limits for the various categories. If you go above the IRS standards, you want to have a good reason for doing so and receipts proving that this is indeed how you are spending the extra money.

Two previous attorneys said you qualified for a 13? Why did they say that if you aren't going to have any money left over and are in fact 2K negative a month?

To me, $4,500 sounds high, but maybe this is because you guys have a lot of assets. Most of the fees for chapter 7 quoted on the board for chapter 7's are around $1,500 to $2,500 or so. Seems like most are slightly under $2,000.

Chapter 13's are more expensive than chapter 7's. But the guy charging $4,500 is the one who wants you to go for a 7 right? What fee did the two attorneys who recommended 13 charging?s

[deafbroke]

We don't actually have the $12k left over because we have tons of other expenses with three children, our daycare cost alone is $2500 per month, over the summer it is about $3,000 because we have to put our third grader as well in camp...without daycare we can't work. We live in a very expensive part of california, i.e our gas is $4.99 per gallon. We have business expenses and taxes that take up more than half of our income each month. We are negative $2000 per month.

The attorney quoted us $4500 to do the CH. 7. Is this what it normally costs? It felt a little high...but I guess if he knows what he is doing it is worth it.

thank you!

$4500 sounds pretty dang high to me but everything is high in california. check around and see who else advises chapter 7. But it sounds like if you have a negative case flow you would qualify for 7. Not sure. Those prices you quoted for gas and daycare just blow me away. It must be nuts in california. good luck, keep us updated on your situation.

DB
g

[PaKettle]

That seems high even for California. I talked to several attorneys in CA and all were under $1500 but that was a simple no asset case. Still
I would be VERY worried about your aunt's money and I think you really really need to be cautious about this. The way I see it this is clearly your money as far as the trustee is concerned and you have to figure out a way to prove it is HER's not your's and yes, you probably do want to transfer it to her first, but also try to prove some way that it WAS her's, you're not pulling a fast one by giving your money to your aunt for safe keeping through the bankruptcy.

This should be a high priority question with each attorney you speak with.

I would definitely talk to 2-3 more attorneys about this.
If you have no money left over then you qualify for a 7 most likely.

But if you quit paying the mortgage then you DO have money left, so I don't know how that works. Hopefully one of the true experts here will chime in and help you. HHM?