Caught in the middle of CH 7 or CH 13

[bmitchell31]

I have business related dept of $138,000 but my consumer debt is $198,000, so not quite 50%. I make more than the median income and I do have a little equity ($15K-$20K). So I have to do the means test, that I'm ok with.

Here's where it gets complicated. I work out of state, therefore I receive a per-diem for travel expenses. Half my salary is overtime I work 50-65 hours a week. I am on a contract basis with no gurantee of extension. My living expenses include my home, land, three cars (one of which I will be letting go back in bankruptcy), and normal and necessary living cost. PLUS I have an apartment, cable/phone, food, gas and others which are travel expenses.

Having done the means test myself, I still show disposable income. How can I reduce my disposable income?

I dont want to file CH 7 on everything, just the business debt. If I am forced into CH 13 I'm afraid that ALL my disposable income will be taken and I will have nothing for unexpected expences, savings (I have none now), or other things I might need or want to buy.

OH!, and $120,000 of my business debt is a balloon note due in three weeks!!

Thanks

[justbroke]

Well, you can't choose what to file Chapter 7 on. You either liquidate, or do not. You could "reaffirm" some debt, but that's a very specific personal question based upon many factors (value, equity, type, etc.).

If you still have significant disposable income (over $300/month) after having already deducted car ownership/operating expenses, food, clothing, insurance, etc... then you have the "means" to fund a Chapter 13.

Don't just make up things, because when you're over-the-median, you will be questioned on all the expenses and that they are actual.

[bmitchell31]

Thanks,
I do want to reaffirm the essentials, house,land,car. It is the business debt that is causing me to make this choice. I dont want to make things up either. Just want all options on the table. I have an appointment with attorney in two weeks.

Do you know how the $120,000 balloon payment will come into play? It is realestate I had on an interest only payments for past year, it's now due and I can't pay. It's been for sale for the entire time.

Thanks again

[justbroke]

Do you know how the $120,000 balloon payment will come into play? It is realestate I had on an interest only payments for past year, it's now due and I can't pay. It's been for sale for the entire time.

Just surrender the collateral and have the personal liability to pay, discharged. Chapter 7 is great for things like that!

[bmitchell31]

Thank you

[justbroke]

Let me clarify, even if you end up in a Chapter 13, you can still surrender that property. I know you're worried about spending money and "disposable" income in a Chapter 13. Well, Chapter 13 relief comes with a price, and that's a budget. If you can't live within that budget, then you'll have to dismiss the case and just be at the mercy of your creditors.

Chapter 7 would probably be the more preferable thing in your situation. However, the ability to pay will always come back to haunt you and have the Trustee screaming abuse.

[bmitchell31]

yeah thats what I thought, I will surrender the property, they will sell and I will owe the difference. I have some means BUT I work under a contract, that contract is up in 7 months. No contract, no money. If that happens I'll be bankrupt any way. No gurantees in life...........

[justbroke]

yeah thats what I thought, I will surrender the property, they will sell and I will owe the difference. I have some means BUT I work under a contract, that contract is up in 7 months. No contract, no money. If that happens I'll be bankrupt any way. No gurantees in life...........

No, the Trustee will say this (and this is what I'm saying to you).

File. If you're in a Chapter 13, you're in a Chapter 13. if your job ends, then you can absolutely convert your case to a Chapter 7! They will consider current circumstances (end of contract when it actually occurs). However, if you are re-employed before discharge, having converted to a Chapter 7, and the Trustee is aware, they may move to push you back to a chapter 13.

Yes, round and round you go.