Help! What should they do? Ch7 or 13? THANKS!

[moneytree]

A married couple in their early 60's are on the verge of one or both filing BK. Husband works 40 hrs/wk and with his income alone, he's roughly $900 over the ch 7 income guidelines and so they'd have to file a ch13 if husband is included.

Husband has health issues & is a condition that might not improve, but he feels he has to work, to keep their healthcare. The couple is raising a pre-teen with high functioning autism that they adopted pretty much from birth thru foster care. They no longer do foster care.

Could it be true that if the husband went to part time work and just paid for health ins. out of pocket, and was then able to file a ch7, that their life could actually be less stressful and less expensive in the long run. I think they are going to 'chance it' and the wife is just going to file a ch7 (she doesn't work due to her health issues) and HOPE that the Wells Fargo $22K credit line won't go after her paycheck collecting husband.

Doesn't it just make sense to file a joint ch7? Wouldn't this make their life easier? If they did a ch13, then they could possibly have a nightmare on their hands later on, if they are not able to make pymts due to the husbands health. They are also making a $1200 mistake by not filing a ch7 jointly, because if the creditors go after the husband, then he'd have to file ANOTHER bk, a 7 or a 13 (then, cut back to part time???) under the husbands name and pay the atty another $1200! Maybe it's best to wait and see? But waiting and seeing to me is just prolonging the inevitable and they could use this stress off their back now.

They also letting a house go into foreclosure. I've posted about this before, but long story short, they did a buy and bail. The purchase of home #2 went thru because of the wife's health condition. They were advised by their atty to not do a short sale, because they also have $20K on a 2nd mortgage.

$40K in unsecured debt
$20K on a 2nd mortgage
$265K house in foreclosure
$250K new mortgage at $1800/mo.

At age 63? husband can collect social security. Wife is on medicare. Health ins. for husband and pre-teen son, should not break the bank and force wife to do a ch7 alone! I tried to make this short and sweet. lol

Thanks for your insight!

[moneytree]

*also, another ? on income tax refund...

I am not sure what they are eligible for (let's assume it's $5K) with their income tax refund, but wife is also worried that the trustee will keep their refund. Is it true that w/ ch 7, that the refund cannot be touched?

In either case, when is the best time to file a 7, around tax time? Or does it not make a difference, because the trustee can collect after a 7 or hold up the bk discharge???

I feel like these are stupid questions, but I am being asked alot by the wife on what to do and of course, their atty should be advising them here, but for now, you guys are the next best thing!

-thanks again!


edited to add:
Wife has mentioned that she wants to keep on paying on the new furniture ($1500 bal?) because she wanted to remain in good standing w/ the furniture store cc & the atty told her that sometimes they can ask for the furniture back (we're talking about 2 couches here) I find that hard to believe. Could this be true? I've told the wife that she cannot pick and choose which accts she wants to pay on and that the trustee will make sure all their cards are closed (possibly in the husbands name too?) I told her to stop throwing the $11/mo. away on this furniture cc, because if she does the ch7, then she'd be stupid to keep on throwing money away since a ch7 is the ultimate ding on the credit report anyway. She might as well include it all! right???

[Tbornetun]

It doesn't matter who files, both or individually. HOUSEHOLD income applies to the means test. The husbands income would be counted either way, even if the wife files alone.

[moneytree]

Very confused now...

Thanks for your reply. I need to read about 7's again to refresh my memory I guess! I passed on your info and I am suprised to hear that the wife paid the atty in full today (minus court fees of about $300) and she still doesn't know what they qualify for! The atty just said that he still didn't know and that it takes a long time to hear back after they run the numbers.

Is it common to have to pay the atty in full before you know what you're filing for? (try not to laugh....no kidding...this is screwed up!)

I am insisting that the husband goes part time, so they qualify for a 7, but I am being told that they cannot afford to do that. Then I am told it's either a 7 or nothing. Is a 13 that bad? I know this is a lot of info, but I really hope that someone on this board can predict a 7 or a 13. The atty is making it sound like the trustee would let $800+? slide when it comes to being over on the means test.

thanks...

[brokenbuthealed]

When I filed my household income was over the median for a 7. Just because your income is over the median doesn't mean you won't qualify, it's just that the calculation gets a little more complicated. If you're over the median then they will take your income - your living expenses (up to certain allowable limits) & secured debt payments and if you then have more than $100/month left over they will determine if the amount of disposable income that you can pay over 3-5 years will make up at least 25% of your debt. If not, then you can still qualify for a 7.

[Tromploi]

I thought I was filing a 13 for almost 6 mos, and went in to sign and it was changed to a 7. I think in some cases the atty just doesn't know (especially if the PL's are handling most of the pre-stuff) until he sits down with you and goes over things in depth. We were $500 over means, but tweaked some things to qualify for a 7. (Some things had been left out, or under estimated).
As has been stated, the payments for a 13 are based on what you have left over each month TO pay back. So in some cases it's not bad.

[moneytree]

thank you so much!

I will pass this info on. I did hear last night after I posted that the atty did want pymt in full (his portion) in order to continue, so that answered my question. I wonder if they'll be able to calculate their own #'s (their situation is tricky) and see if they can figure this out before they hear from their atty.

-thanks again!-

[StartingOver08]

Moneytree - I filed without my husband, but we had to use the household income. We were way over median (about $70k over) and I was able to file a CH 7. The attorney needs to have all the figures to determine what is best for this couple.