Researching chap. 7 for my mom, need advice

[Whittio]

COOL! I got into the credit reports, and pulled all 3. The only things she has is the two cards we knew about. One of the cards is less then a $4000 balance.. it's the big one that's over $18k.

I didn't get the name of that paralegal yet. We have a court appointment tomorrow morning at 9:30 to deal with our neighbors dogs, and then at 3:00 I have my grandma's funeral so I'll get that paralegal early next week and see what she does and suggests.

I am very encouraged by this. Using the minimums on all her bills and stuff, I still got her monthly expenses to almost $1300.. and she just got her paycheck today and with her most recent raise, she brought home $315.81, x4 = $1263.24 per month.

If the living expenses didn't include the annual costs and the occasional costs, I don't think we could have gotten as close, but still within $300 of her monthly net. But using things like her smog check, vehicle registration, car repairs/maintaince, hair cuts.. gosh, it sure does add up!

Thanks for all your support. Hopefully we'll be moving forward with this by the end of next week. She has ZERO assets, so I don't think this will be difficult at all!

[KristyAnn]

expenses

I dont think you include credit card payments on your expense listing for bk- at least not in Chapter 7.

[HHM]

I dont think you include credit card payments on your expense listing for bk- at least not in Chapter 7.

Correct, payments to credit cards do not count as "necessary living expenses".

Living expenses are thing like
Rent/mortgage
car payment
insurance
groceries
utilities
hygiene and grooming
etc etc.

[Whittio]

I listed the 'living expenses' on the last page, I didn't even include the credit card payments and still got it up to $1299.57. But since the annual and occasional things are included (car registration, hair cuts, postage, pet supplies etc) I had no problem getting the amount up there, and I used the IRS amounts for several items that we had no clue how to separate.. (laundry items, non-food items, hygiene supplies).. those are things she buys all together at the grocery store so it's all on her credit card bill as "grocery". So I just used the IRS guidelines for those.

[herekitty]

I'm glad things are starting to look up for you and that you got all the copies of the credit reports Good Luck and we are all here if you need us!

[Whittio]

OK, on another thread, someone recommended the software from www.form7.com I am in the process of downloading/purchasing that program. I hope it works well.

As I go through the questions, I hope it's OK to pick some brains here. I don't think it's going to be difficult once I get started, I am pretty computer savvy. I just want to be sure I get everything RIGHT!

[Whittio]

OK, I ordered the form7.com software. It is very helpful, but would be MORE helpful if I could figure out some of these questions..

First things first.. it asks about "real property".. and cash on hand and in bank accounts. Mom has a savings with $300 in it. Will that be allowed or should she get the muffler and front end work done on her car with that NOW. (she was going to wait awhile). She also keeps out $50 from her paycheck each week for her lunches, so basically in cash, she has $350 right there. And her checking account fluctuates depending on when she pays her bills. If you take her checking balance the day she puts her check in, she has lots of money.. but after paying bills, her normal running balance is about $75.

Schedule C.. I have to choose one? It says to study the exemptions and choose either California 1 or 2? how do I know??

I am going to have LOADS more questions.. I hope you guys don't mind. I filled in all the no-brainer info, so I am about 1/2 done. Now just have to figure out all this other stuff.

[Whittio]

OH, and she also has 2 security deposits.. one on her apartment, and one with her propane company.

I am thinking we need to file under C2, that way she can use the wild card?!

Her jewelry is under $400, her car is about $700 and only has her clothes/furniture/TV. (other then the cash on hand).

[Whittio]

Oops, another question..
when I am listing her credit cards (unsecured credit) do I list approximate balances? What if I list low, and she has used them, will the purchases be included, or should I estimate high to include everything?

[HHM]

Oops, another question..
when I am listing her credit cards (unsecured credit) do I list approximate balances? What if I list low, and she has used them, will the purchases be included, or should I estimate high to include everything?

The balances do not have to be exact. And you can even put unknown.

[Whittio]

Does it matter that she has "personal property" like her furniture, clothes, few rings.. All together it only adds up to like $2700, that's EVERYTHING, even her car, cash on hand and security deposits. She has absolutely nothing she can sell, but I worry about the deposits (which she can't cash in!) and her $300 in the savings.

[originalhealer]

I wouldn't worry about the deposits, because she can't access them anyway, though the Trustee may take them to pay off some of her debts.

The rest...you need to itemize everything and figure out what is covered under the exemptions from your state. From what you said, it looks like she will be able to keep everything, but you have to add everything up to be sure. Make sure you don't overestimate the value of anything...do garage sale/ yard sale value on everything. Use Kelly Blue Book trade-in value for her car.

[Whittio]

How in the world do you estimate the value of all her clothes, furniture, TV.. do you include things like dishes??

Apparently California has two different choices when it comes to exemptions. One of them has the "wild card" but doesn't exclude as much as the other one, so I have to try it both ways and see what one is best for her.

I was sent to a law firm site on page 1, that had a "average monthly household living expenses worksheet", I found that VERY helpful, but the problem with the worksheet vs. this form7.com program is that the categories are different. Like instead of "food/non-food/hygiene supplies" it has just "food".

In fact, here's the only expenditures they list:
rent or mortgage
electricity and heating fuel
water and sewer
telephone
other (I listed cell phone)
Home maintenance (repairs and upkeep)
food
clothing
laundry and dry cleaning
medical and dental expense
transportation (not including car payments)
recreation, clubs and entertainment, newspaper, magazines, etc.
charitable contributions
Insurance (not deducted from wages or included in home mortgage payments)
Homeowners/renters
life
health
auto
other
taxes (not deducted from wages or included in home mortgage payments)
specify (I assume I am to put her car taxes/license here?)
installment payments:
Auto
Other
Other
Alimony, maintenance, and support paid to others
payments for support of additional dependents not living in your home
regular expenses from operation of business, profession, or farm
Other


so I am not sure where some things fit into those categories. Like pet supplies, postage stamps, haircuts, gifts, tobacco... I can add most of the "grocery items" under the food category.. but with her tobacco and wine, lunches, household items.. that would inflate the 'grocery' category.

[originalhealer]

Don't overanalyze. But don't be too slack, either. Just relax and tell the truth. When I did mine it was easy because my rent is so ridiculously high that by the time I added my basic utilities, car payment and auto insurance, I was over my income. So, I didn't need to "nit pick" about this or that.

Just list your mom's honest expenses minus what she won't have to pay anymore after she files bankruptcy, like her credit card payments. If you still have an overage, then you can go back and nit pick to get her expenses up to the amount of her disposable income.

[originalhealer]

Also,

Didn't you say you got the Form 7 software? If so, take a look at the sample bankruptcy and the three case studies that are included in the software. That will really help you to see what you should list and how you should list it.