Having trouble keeping our heads above water.

[flyinbroke]

No one has said the IRS is realistic with its numbers; if I am not mistaken, they base them off census reports and the last one is ten years old! I think they also use inflation rates, which have gone down...making amounts lower.

To the OP, best of luck whichever road you choose.

[Klesko]

Where my daughter lives now is the best thing in the world for her. She is having great memories because of where we live. And as for vacations we always try to find the money to take one, once a year. Last year we went to California for 10 days. Vacations and memories are not the problem.

As for overtime, I don't work any because there isn't any to be had in my company. And my wife works a 40 hour week.

Believe me guys as much as you jump on my house it is not the problem. I have been paying a mortgage that is 29% of mine an my wifes salary for a long time now. The house will not go because then we have nothing.

I hate to tell you this but you have nothing now, financially speaking. So why not sacrifice 3-4 years so you have something in the future? Or you can continue to struggle and maybe in 10-15 years you get out of it. But more then likely you delay the inevitable. The first bump in the road say 2-3 years from now and you are forced in BK7 losing the house and having to fix something that could have been fixed years ago without the BK.

[rusty95]

Rusty,

One last stab at some help from the Forum...A link that tells you what the IRS numbers will be like, when assessing acceptable expenses for a Chapter 7.

http://www.irs.gov/businesses/small/article/0,,id=104830,00.html

You will note that in Suffolk county, the allowable expense deduction in Chapter 7 cases is $2,647 a month, including utilities (and that's for a family of five-it goes down slightly for smaller families). You are way over that, and a Trustee could question this in a 7, in that you pay much more than that.

Another link that may be helpful to you is this one, that deals with income limits for Chapter 7. For a family of four the limit in New York is $82,457. If you are a smaller family, it goes down.

http://www.totalbankruptcy.com/chapter-7/requirements/median-income-tables.aspx

Nobody is arguing that these limits are based on any of our realities...Just that they "are".

I honestly don't know where the IRS gets those numbers from but there is no way anyone out here with a mortgage can live at that level. Maybe a third world country but not in the tri state area. My electric bill alone is 285. And that is running around shutting things off.
I have proof for every expense that I have. NY has the highest rates in the country.It is all legitimate.

[BrokeOR]

Rusty,

One last stab at some help from the Forum...A link that tells you what the IRS numbers will be like, when assessing acceptable expenses for a Chapter 7.

http://www.irs.gov/businesses/small/article/0,,id=104830,00.html

You will note that in Suffolk county, the allowable expense deduction in Chapter 7 cases is $2,647 a month, including utilities (and that's for a family of five-it goes down slightly for smaller families). You are way over that, and a Trustee could question this in a 7, in that you pay much more than that.

Another link that may be helpful to you is this one, that deals with income limits for Chapter 7. For a family of four the limit in New York is $82,457. If you are a smaller family, it goes down.

http://www.totalbankruptcy.com/chapter-7/requirements/median-income-tables.aspx

Nobody is arguing that these limits are based on any of our realities...Just that they "are".

[rusty95]

I appreciate all of your comments. But I will not stop paying the cards until I see a lawyer. And I will only do so upon him telling me. He will be able which avenue too take. I will not go chapter 13. If that is my only option we will tough it out and pay them down.

[rusty95]

I wanted to add one more thing about the house. Although I agree with the others that it is simply beyond your means the decision in how you want to live is yours alone.

When your children get older, they will not so much care about WHERE they lived but will cherish the memories of growing up. Many of these memories for most people include vacations and family time spending time together. As long as you live to pay for that house, these opportunities will be very limited.

So do the math and figure out if you want to be the parent that is slaving to pay for something that keeps you financially strapped, or if you want to be the parent that has time and money for that precious quality time.

Please don't take offense, but your financial condition does reflect in the type of parents you are. Stress, working overtime, constant worrying and all are a weight on our shoulders.

Think carefully and make the decision that is best for your family in the long run, not just today.

Where my daughter lives now is the best thing in the world for her. She is having great memories because of where we live. And as for vacations we always try to find the money to take one, once a year. Last year we went to California for 10 days. Vacations and memories are not the problem.

As for overtime, I don't work any because there isn't any to be had in my company. And my wife works a 40 hour week.

Believe me guys as much as you jump on my house it is not the problem. I have been paying a mortgage that is 29% of mine an my wifes salary for a long time now. The house will not go because then we have nothing.

[ForumReader]

Just read the entire thread and I agree with the last post, that, Rusty, it is best for you to go see a few BK attorneys and to see if filing for BK is the best option for you and your family. It does sound like to me, you may end up being in a CH 13 plan though. Good luck.

[flyinbroke]

Unfortunately, the trustees go by IRS standards. At least you get the mortgage exemption; rental exemptions for the IRS is half of what mortgage people get. We know the IRS standards are WAY lower than what reality is...unfortunately that is how the game is played. As for house value...in today's market it is worth what someone will pay for it. As brokeOR says, tax rate values are way overinflated so the city can recoup more of your money. Zillow and its ilk rely on property tax records and their appraisals are way more than what properties are actually selling at.

Echoing what Lula says in that some of your posts are condescending and border on insulting. My neighborhood rivals your property taxes and I am almost as south as you can get without crossing the border. Bottom line: from what I have read so far is that you have way too much money left over to file a 7. Get a lawyer and you will know for sure.

[BrokeOR]

Rusty,

I echo everybody's sentiments, especially that this is an intensely personal decision. But, if you take nothing else from this conversation, you might do well to examine your idea of "musts" and "can'ts" against the hard rules and acceptable limits of the Trustees in your area. A good lawyer, in an initial (and free) consultation will be able to assess your situation and advise you as to exactly where you stand. Then you won't have to guess-you'll be informed based on the laws and limits in your area.

One more thing...You assert the value of your house is $575,000. Hopefully, you have done a true analysis through a local realtor as to your actual market value. Relying on things like Zillow and "list" prices is a poor determinent of actual value in today's real estate market. The same is true, in many areas, of tax assessed value. Especially in areas with great schools and good amenities, tax assessment is often very inflated versus true market value. Again- a good attorney will tell you to do this BEFORE making any final decisions as to whether or not you choose to keep you home, as they are seeing too many people who are making emotional decisions that are eventually going to land them back in hot water, financially speaking.

Bottom line: Feel free to ignore all of our advice, bourne out of experience-often harsh experience. But you will not be able to ignore the Trustee's hard rules. See a local attorney, and find out where you're at. It's the best play for you at this point.

[NoMoreCards]

I wanted to add one more thing about the house. Although I agree with the others that it is simply beyond your means the decision in how you want to live is yours alone.

When your children get older, they will not so much care about WHERE they lived but will cherish the memories of growing up. Many of these memories for most people include vacations and family time spending time together. As long as you live to pay for that house, these opportunities will be very limited.

So do the math and figure out if you want to be the parent that is slaving to pay for something that keeps you financially strapped, or if you want to be the parent that has time and money for that precious quality time.

Please don't take offense, but your financial condition does reflect in the type of parents you are. Stress, working overtime, constant worrying and all are a weight on our shoulders.

Think carefully and make the decision that is best for your family in the long run, not just today.

[nerves]

Not sure how much your 401k loans are but maybe you would be better off applying the $800 a month you are contributing for retirement towards the loan amount. The funds are still going into your retirement account and you will be eliminating a debt. After you pay the 401k loan in full, use the amount you were applying to the401k loan towards your other debt and start contributing $800 again to your retirement. The benefit of doing this is if something would happen to your job, you would eliminate the tax issues and you would be paying off more debt. As for your home, after the tax deduction for the interest and taxes, you really aren't at 29% - it is actually less. I agree with others that you have a hefty mortgage and it would be best to find something more economical if possible. You may want to keep your eyes open for any foreclosures in your neighborhood and try to get a similar home for less money. JMO.

[lulabelle]

Now I don't care what the IRS says but you can not live out here or any where else on the Island or the city area for 1650 a month.

Unfortunately the US Trustee cares and that's the numbers they go by.

I do understand what you're saying though - you're in a tough situation. I don't know how you'll qualify for anything other than a 13, but maybe that will still be better than the situation you're in now.

Just one last piece of advice - be careful not to make assumptions about fellow poster's situations regarding income/where we live/how much we pay in taxes. You are not a "special case". Many of us live lives very similar to yours - we can all get in too deep and some of your statements are bordering on insulting.

[rusty95]

Can you give a breakdown of you pay then?

$181k comes to 15k a month gross, $10,101 net if you are in the 33% tax bracket. So where is the other $1,300 a month going? I am assuming retirement but break it down. It may help.

Now this mine and my wifes combined. At least 800 goes to 401 k's and retirement. About 280 a month towards health benifites. Then you have union dues and 401k loans being paid back.

[Klesko]

Can you give a breakdown of you pay then?

$181k comes to 15k a month gross, $10,101 net if you are in the 33% tax bracket. So where is the other $1,300 a month going? I am assuming retirement but break it down. It may help.

[backtoschool]

Maybe it's time for a little education. I live in Suffolk county. Now I don't care what the IRS says but you can not live out here or any where else on the Island or the city area for 1650 a month. Not going to happen. Now you can look up houses all you want but you won't find anything under 400,000, unless you want to live in a crappy area where you are not safe. So if you look find out the good areas. Now if I sold my house, I will not get anything for myself out of it. That pretty well means that I will never own a house again. Because I will never be able to put together 200,000 for a down payment. That pretty well means that after making 20 years of rent payments I have nothing, where as after 20 years of paying a mortgage I have the house to sell. Now I realize that most of you posting here live in southern states and other places outside of the tri state area. I have friends that live in your areas and they can get a house for 200,000 that will put my house to shame. Plus you get very low property taxes. Mine are over 11,000 a year. That is probably a third of some of your salaries for the year. So unless you have experience in my area you don't know about how much it ACTUALLY costs to live here. Now about the 52% of my salary, the mortgage companies go by gross income. So if you look at it in the respect the house is less than 29% or right on target for this size of a mortgage. Unfortunatly the house stays.

Now one of you said to move to a different area and put my daughter in a private school, do you know what a private school costs, between 8 and 10 grand a year. Yes you heard it right. A good top of the line school costs that much. And her education will be no better than the one that she is getting now. So lets see 3500 for rent and then another 900 a month for a private school that comes out to 4400. It seems I am paying less now. Like I said before my daughter education is very important to me.

As someone who lived in the nyc area for ten years before I moved last year to the midwest, I think I understand the housing market there.

As someone who considered filing for bankruptcy in the nyc area and met with a lawyer, I was advised that it is virtually impossible to file chapter 7 if you have the kind of income and expenses that the OP has. The metro nyc area has a huge US trustee's office that tries every way possible to push people into chapter 13, especially if they are high-income filers like the OP.

Here is what will be contested by the US Trustee in the OP's scenario in my opinion:

Mortgage payment over the irs standards
Any car payments over the irs standards
personal expenses over the irs standards