Researching chap. 7 for my mom, need advice

[Whittio]

Hello! I am trying to research the best way for my mom to file for chapter 7. We are in Northern California and she will be 58 at the end of this month.

Mom brings home (after taxes) about $1200 a month. Her expenses are as follows:
Rent $445
Electricity $35
Phone $30
Propane $20
Gas for car $80
Car insurance $50
Cell phone $6

I have done what I can to reduce her bills, I gave her my old cell service for $6 a month (emergencies only), I got her into a low income senior apartment, so her rent and utilities are very low. There really isn't much else to cut out.

With her take home at $1200, and the above mentioned bills at $666, that leaves her $534 a month to live on, and her CC bills are $500 a month. So needless to say, she charges about $250 for food and incidentals a month. I don't think that's out of line at all. She has no paid TV service, or anything I would consider for luxury.

The fact is, she needs to file chapter 7. And I am going to have to do it with/for her, as she is pretty uneducated in anything like this. (as am I, but I have the resources to research). She doesn't have the money to pay an attorney to do this, how difficult would it be to buy one of those computer programs and file on our own? Or is that too much of a risk?

She has NO assets. Her car is only worth about $700 at the most. She hasn't used the cards to vacation or to buy anything other then food/cigarettes etc., which she has done for years now. (no NEW usage). She also has never missed a payment.

She owes about $20k, on two cards.

Any and all advice would be much appreciated. We need to get started right away!!

[herekitty]

Make a list of monthly expenses with out credit cards - include everything from groceries and food to haircuts and clothing. You'd be surprised at how much it adds up. It seems like if you do that, she might be able to file chapter 7. There's a bunch of people on this site that have filed by themselves, they can give you more insight. You may want to talk to a paralegal who can at least help you file and take advantage of the free consultations by attorneys - they can give you a little insight as well.

[Whittio]

How do you itemize things like hair cuts and clothes since they aren't monthly expenses? And do we need receipts to back everything up? I don't think she pays cash for anything since all her cash is sent to pay bills (which she'll have copies of bills as proof) so her credit card should show all her 'living expenses' outside her normal bills.

Is there anyway they could look at her expenses and say that she CAN afford to pay the bills? I mean, she really can't live on what she makes, and there's no way to reduce her living expenses any further!?

[herekitty]

My attorney gave me a worksheet where you estimate your monthly spending. Included in it was everything from groceries and gas to haircuts and clothing. I didn't need receipts to verify.

From what I know, the expense list is key to finding out if she can afford her bills or not. There's a lot of different threads that talk about expense lists and what is reasonable and what is not.

[Minnymouth]

you stick by your MOM, help her anyway you can. She's probably "scared to death" over this!!!
My mom was not very knowledgeable about a lot of things and I had to "hold her hand" a LOT..... to help her out!!
Have a free (make sure it's free) consultation with at least 2 lawyers. (Don't tell them your note hiring them) Take her list of monthly expenses - included everything you can, cleaning supplies, food, entertainment, possible repairs on vehicle (tires, brakes -estimate), clothing, tithing at church, rental on anything. Life insurance premiums, car insurance, etc. (Dog food even went on mine for 2 pets). You will be surprised how quick all of this will add up.
Your goal is to only have $100.00 or less left after she pays everything.
Looking at your list of expenses, her electric bill is extremely low...estimated?? Also phone bill could be more than that sometimes. Her gas bill for car could run more each month than that.
There is a guideline posted on this forum. Search under "expenses" or "allowed expenses" and do some serious reading.
Let the lawyers look at it and give you your options.
Yes the packets are easily filled out and you can file hers without a lawyer. But you still have to pay filing fees, etc!
Caution though, you have to meet certain deadlines, certain paperwork has to be filed correctly - or case will be dismissed.
So be sure you do your "leg work" and ask questions on this forum if you have any.
We all will be glad to help if we can.

More than likely after all expenses are figured in she will qualify for a Chapter 7 - if not a Chapter 13 would at least eliminate part of the problem that keeps "building".

Keep us posted,

Minny

[mymymy]

Whittier... use this calculator to figure out mom's expenses. Haircuts and such are pro-rated.. Try to get her expenses to somewhere near breakeven, or at a loss each month. Definitely not more that 100.00 left over. You'll be surprized at how little money is actually left over! Um.. where does she get her income? Does she work? Social Security? Where will she be filing, what state, I mean?

http://www.ca-bankruptcy-attorneys.com/calculators/expense_calculator.html

[Whittio]

We are in California. She has a job at a local grocery store. Do I use her GROSS or her NET income? Her health insurance is taken out of her paycheck.

I know for a fact she could easily show expenses to meet her income. She has one cat, and yes, her bills are cheap, because she is in low income/senior housing. And yes, those are 'average'. Like this month, her phone bill was $65 because she had to call my brother long distance several times about my grandma's dying/death.

Her car needs repairs right now, to the tune of about $600, and she needs to pay that before she pays for the bankruptcy, but she needs to get out from under this debt!

Thanks for the calculator.. I'll go use it now, and will have to wait till she gets home to get some expenses from her! THANKS for everything.

[Whittio]

HA, just my basic assumptions on how much she spends when you calculate in annual fees (car repairs, license, smog etc), she already spends OVER her net income!

I don't see a place for the taxes she has to pay out of her check, so I just used her net income.. is that wrong?

Also, has anyone used the computer kit for filing? I think I found it at Office Max for $25 and I HOPE it's a lot like TurboTax, in that you fill out the questions and it fills in everything for you and prints out the pages you need? Or is this a pipe dream?

[mymymy]

The Office Max kits probably aren't too bad.. but, make sure you read YOUR clerks instructions. MANY times, there are "local" forms that must be submitted with your petition as well as the Official Forms. For example: Everyone must submit a Statement of Social Security Number since the government instituted the use of only the last four digits of SS#'s on the actual petition. There may be other forms, also. Your local forms will not be included with the Office Max kit. Keep in mind.. you may also get your forms free of charge from your districts court website.

[Whittio]

OK, I used the calculator, and also found some posts about the IRS national standards for living expenses, so used those guidelines for some of the things, like food, clothes, personal care, because all those things are in her "grocery" bill.. so that helped to classify things better for us. Here's what I came up with..

Average Monthly Household Living Expenses

Rent or mobile home space rental: 445.00
Electricity: 35.00
Natural gas: 35.00
Telephone: 45.00
Cell phone/pager: 7.00
Food: 200.00
Household items (non-food items):30.00
Hygiene supplies (tooth paste, toilet paper, etc.): 20.00
Clothing: 50.00
Laundromat, detergent, softener, etc.: 20.00
Prescriptions and "over the counter" medications: 15.00
Recreation & entertainment: 10.00
Presents for holidays, birthdays, etc.: 33.33
Auto Insurance: 51.00
Gasoline: 52.00
Tires: 15.00
Auto repairs: 12.50
Vehicle maintenance: 6.00
Smog check: 3.13
Vehicle tax & registration: 5.00
Cosmetics: 15.00
Haircuts: 7.50
Tobacco: 80.91
Work lunches: 80.00
Postage: 3.70
Pet food/supplies: 22.50
Total living expenses 1,299.57

Now her Net pay is $400 per week, but her Gross is $500 a week. Are these amounts for net or gross. They take out $100 a week from her check, part is her health insurance, the rest is taxes.

My husband got the name of a lady who does these pretty cheap, I am assuming (by the sounds of it) she is a paralegal because she "helps us".. we have to do all the paper work, filing and such.. so from the sounds of that, she just looks over things. He left her number at his office, so I'll call on that tomorrow.

The utilities are just guesses.. mom is going to get me all her bills for the last year, and I'll average all her utilities. That might get our total up a bit more. I am SHOCKED at how all this ads up so quickly. I was looking at her overall annual income (of just about $20k) and wondering why she doesn't have any money when we support a family of FIVE on $40k a year! I think the difference is her taxes.. but it still doesn't account for that much. If she would stop drinking and smoking, she could save a BUNDLE.. but I have to say, it's her vice, and she doesn't have anything else to occupy her time.

She needs new tires on her car. She's driving on two bald tires. I told her to go to Walmart Saturday and get the tires. I don't care if it's disallowed in the long run, I can't have her driving on bald tires on the roads out here. I hope that's not going to create a problem?? Should she still just use her cards as she always has (food, gas, clothes) just not to access? I told her to try to cut back until we file. Hopefully we can get things together and file QUICK. From what I understand from reading here, once she has filed, she should stop making payments right?

ALSO.. I almost forgot. About 8 years ago, her sister bought a cell phone, mom co-signed for it. That was $350. Then the cell phone company sold my aunt a SECOND phone, that my mom did NOT sign for. They copied the signature off the original card. Well 7 years ago, when my mom tried to rent an apartment, it showed up on her credit report. She called them and told them she wasn't going to pay it because they shouldn't have sold my aunt the phone without my mom there! I don't know if that charge is still on her credit or not. Should we pull a credit report just to verify what's there? If the cell phone IS on there, we would include them in the bankruptcy too right?

[mymymy]

OK, I used the calculator, and also found some posts about the IRS national standards for living expenses, so used those guidelines for some of the things, like food, clothes, personal care, because all those things are in her "grocery" bill.. so that helped to classify things better for us. Here's what I came up with..

Average Monthly Household Living Expenses

Rent or mobile home space rental: 445.00
Electricity: 35.00
Natural gas: 35.00
Telephone: 45.00
Cell phone/pager: 7.00
Food: 200.00
Household items (non-food items):30.00
Hygiene supplies (tooth paste, toilet paper, etc.): 20.00
Clothing: 50.00
Laundromat, detergent, softener, etc.: 20.00
Prescriptions and "over the counter" medications: 15.00
Recreation & entertainment: 10.00
Presents for holidays, birthdays, etc.: 33.33
Auto Insurance: 51.00
Gasoline: 52.00
Tires: 15.00
Auto repairs: 12.50
Vehicle maintenance: 6.00
Smog check: 3.13
Vehicle tax & registration: 5.00
Cosmetics: 15.00
Haircuts: 7.50
Tobacco: 80.91
Work lunches: 80.00
Postage: 3.70
Pet food/supplies: 22.50
Total living expenses 1,299.57

Now her Net pay is $400 per week, but her Gross is $500 a week. Are these amounts for net or gross. They take out $100 a week from her check, part is her health insurance, the rest is taxes.

Net pay is the number you would use

My husband got the name of a lady who does these pretty cheap, I am assuming (by the sounds of it) she is a paralegal because she "helps us".. we have to do all the paper work, filing and such.. so from the sounds of that, she just looks over things. He left her number at his office, so I'll call on that tomorrow.

The utilities are just guesses.. mom is going to get me all her bills for the last year, and I'll average all her utilities.

Good Idea.. they seem low, even for senior living

That might get our total up a bit more. I am SHOCKED at how all this ads up so quickly. I was looking at her overall annual income (of just about $20k) and wondering why she doesn't have any money when we support a family of FIVE on $40k a year! I think the difference is her taxes.. but it still doesn't account for that much. If she would stop drinking and smoking, she could save a BUNDLE.. but I have to say, it's her vice, and she doesn't have anything else to occupy her time.

She needs new tires on her car. She's driving on two bald tires. I told her to go to Walmart Saturday and get the tires. I don't care if it's disallowed in the long run, I can't have her driving on bald tires on the roads out here. I hope that's not going to create a problem??
Definitely get tires! And don't forget to prorate the cost of them into vehicle maint. expenses

Should she still just use her cards as she always has (food, gas, clothes) just not to access? I told her to try to cut back until we file. Hopefully we can get things together and file QUICK. From what I understand from reading here, once she has filed, she should stop making payments right?

If she is definitely going to file, she can stop making payments to all unsecured creditors NOW. It's throwing good money away. Small charges for nesseccities probably wouldn't be a problem.. but, better to use the money she would have been paying to creditors, instead.

ALSO.. I almost forgot. About 8 years ago, her sister bought a cell phone, mom co-signed for it. That was $350. Then the cell phone company sold my aunt a SECOND phone, that my mom did NOT sign for. They copied the signature off the original card. Well 7 years ago, when my mom tried to rent an apartment, it showed up on her credit report. She called them and told them she wasn't going to pay it because they shouldn't have sold my aunt the phone without my mom there! I don't know if that charge is still on her credit or not. Should we pull a credit report just to verify what's there? If the cell phone IS on there, we would include them in the bankruptcy too right?

LIST IT, LIST IT, LIST IT No matter how remote or how small a debt is.. get rid of it!

Hope that helps a little

[Whittio]

Thanks, it does help! Unfortunately she already paid her credit card bills this month.. silly girl.

I'll pull a credit report and see what's showing. We don't even know if that cell phone bill is still on her credit or not because they never should have charged my mom. It was my aunt who bought the phone! So they messed up, they might have taken it off once my mom told them of the "error"?

[herekitty]

Go to annualcreditreport.com and you can receive all three of your credit reports for free (only once a year). That way you can see if the charges are on there. Make sure you get all three .... there were some of my creditors on one but not the other.

Good Luck! and I'm with mymymy ... LIST LIST LIST

[Whittio]

Thanks for the website for the credit report! That will come in handy, as I was going to pay for them!! Don't ya just love forums?? Man, I live for forums! People helping people!

I need my mom to be on the phone with me so I can get some info from her. I thought I had everything I needed, but the first report asked for employment history (or credit card numbers) and so I went for the employment history, which they gave me 3 choices, and only ONE of them had dates/details. I got that one right, but they wanted MORE?! How do you give more, if they don't even HAVE more!! GRRRR..

So, I'll try again this afternoon when she's home from work. I also need to get that number from my husband and see if in deed it is a paralegal. If it is, and it's affordable enough, we'll do it through her. That way it's not all on MY shoulders to make sure I have everything correct!

[Minnymouth]

Be sure and scan that "credit report" for any accounts that your mom might have forgotten to list. Be sure to include these too if they have a balance or gone to collections.
Take your own advice - use that paralegal's advice if free.....
Good Luck,
Minny