Need some advice on a Ch7

[so-beyond-broke]

Hello Everyone:

I am new to this forum, but I have been viewing the posts for weeks on a daily basis. There are some pretty interesting questions being answered here and I hope that you can answer mine as well because I am new to BK. I am from the Big Apple and I am broke beyond recognition that I have decided to file a Ch 7 no assets case. I have been experiencing financial problems for almost 2 years now that its inevitable - I must file but now under the new laws. I am doing my homework because I plan to file in the spring and I also plan to file on my own so it will help dearly to get as much info as possible. Legal representation is so expensive and I have read so posts that clients are getting "burned" by the very same representation that they are paying for. So here are some questions I have.

1. I have read that if you file your taxes now, receive them and spend it asap and not on luxuries, but necessities the trustee can't ask for something that's already been spent. How right is this? I need to badly replace household furnishings like beds and clothing for my teenage kids. My car insurance needs to be paid and the car can benefit from some work, so I wouldn't be buying a fur coat! LOL.

2. My refunds tend to be big - not due to federal tax withheld because the way I fill out my W-4 its based on the #of dependents and income so when I add up the numbers on the worksheet its high so I barely have any federal taken unless the pay that period exceeds a certain amount. As for city, state and other taxes they add up so I am always paying on some kind of taxes. My refund is mostly from EIC (if you make less than 35,000 you're entitled - the less you make the more $$ you get back) and child tax credits. Can a trustee try to take this? If it wasn't for the kids, I wouldn't get this anyway? I am getting conflicting information.

3. As for property - here's a question that I am not completely sure of the answer yet. I moved in with my partner 15 years ago. He had taken over the apt from his mother when she moved out. Actually he has lived in the same apt for 44 years. Some of the items in the place is furniture that he grew up with or things that were already there before I moved in. We have 3 teens at home but are not legally married. He has bought his personal things over the years as well. During my 15 year stay, I have bought my personal things as well as things for our children. If we were to split today - I would only walk away with the things I bought for myself and the kids because these things are my property and I am sure a court would back me with this. So keeping this in mind, when its time to fill out the schedule B - Personal Property I would only be able to list things that I purchased for me in the kids right? I don't want to place items down to have them exempted that are not mine or that would exceed my exemptions. He bought the couch and I bought the chair but we as a family all use it, but if we were to split we'd have to divide up our property right? I feel the same should be on a BK filing. He's in debt up to his eyeballs too (he's doesn't care) but since we are not married we can't file a joint claim.

4. Do I have to count the partner's income in my Bk filing - under the means test? The year 2005 was really bad for us. We both were unemployed and employed on and off. I am now working again but its for alot less than previous years and he's been unemployed since September. He does contribute some money from unemployment to help out the household budget i.e. food $ or what I decide to use it on. After all UIB is not alot a week and he has his own bills to pay, but all of my income goes to the major bills i.e. rent, clothing and feeding 3 growing teens and my personal bills. The NY median income for a family of 5 is $73,864 and if I don't include my partner a family of 4 is $67,564. How is this actually figured out. Is this amount for an entire year or is it for 1/2 the year (6 months) which means my family of 5 can't be above $36,932 of 4 people $33,782. If I were to file today - we only earned through wages, UIB and SSI $26,000 way under the median.

5. Can you exempt a car that you are still paying on? My car is 8 years old. Its worth about $3400, but I owe about $3700. I figure 10 more payments and its mine. I bought it used in 2001 and would hate to have to give something up that I am close to paying off so that's why I will re-affirm it. It will sure be nice to finally not have to pay a car note. I am going to have to pay my student loans shortly so I will be glad to get rid of an expense. It would sure be nice to take my "ex-car" payments and put it in the bank and start saving. I don't remember the last time I had a savings account.

Thanks for the advice,
so-beyond-broke

[SinkingFast]

I can help you with the answer to number 5. About your car.

Here's a link to the Forum thread about NY exemptions:

http://www.bankruptcyforum.com/t266-new-york.html

It looks like you shouldn't have a problem with keeping your car as far as the state exemptions go. Even tho it looks like the exemption for a car is $2400, you owe more than your car is truly worth. The $2400 would come in if you owned the car with no payments, or had more than $2400 in equity in the car. Example, the car is worth $5000 and you owe $2000. You'd have $3000 in equity and that's $600 more than your allowable exemption.

One thing to note about your car payment,........ When you have to figure the payment on Line 42 of the Means Test, you have to amortize the amount you have left on your loan over 60 months. So if you're paying a $500/month car payment, line 42 may only be a $200/month entry. We are still in the first year of a 5 year note and Line 42 is about $35 lower than our actual payment. People who are close to the end of paying their note car loan, or have a shorter note, will take a hit on that line.

On your income, keep in mind the new code works off an average of the last 6 months. If you were unemployed for a period of time and only went back to work 3 months ago, 3 months would be $0 (or whatever unemployment you may have had) in income. You'd add up the 3 months you worked, plus unemployment if you had any, and divide by 6 to get your monthly average income. You are correct that you take the annual amount allowed by the BK law and divide by 2 to get the 6 months wages for comparison.

You will have to ask an attny about including your partner or not. The Court may not allow it because you are not married. The new BK laws did not clearly define family and/or dependents. The BK law refers a lot to the IRS codes and uses stats from the Census Bureau. Both the IRS and CB have definitions of family/dependents/household units. The new BK law has no such definition that I've been able to find.

[bkfiler]

1. I have read that if you file your taxes now, receive them and spend it asap and not on luxuries, but necessities the trustee can't ask for something that's already been spent. How right is this? I need to badly replace household furnishings like beds and clothing for my teenage kids. My car insurance needs to be paid and the car can benefit from some work, so I wouldn't be buying a fur coat! LOL.

its up to the trustee. just because you dont have it doesnt mean you wont owe it to him. we cant tell you for sure. however, i you have to spend it then do use it on needed things and save the reciepts.

[bkfiler]

im going to take a guess, while we wait and see what others with actual experience have to share but:

you are going to have to include all household income. its all used to pay for expenses and that is what it gets compared to. your debts are being trying to be discharged, not the other persons - so their things can not be taken to pay the creditors. the problem that i am unsure of with the new laws is how it works for the means test and how it would work for the chapt 13 route. it might be that both are used for median income test, but when working out a chapt 13 plan then their income isnt used becuase they are not filing. its gets confusing.

you exempt what you want to protect. if you have too much stuff to exempt then i guess you just make sure that the other person owns it and not you.

[so-beyond-broke]

how will I pay it back?

Thanks for your post bk. I am not happy to hear that the trustee might want it back. I will keep receipts but if I am filing Bk - I am obviously in financial trouble and can't pay my bills, so why would the trustee try to ask me to pay back my refund to him? What will I pay it back with if the money is spent and gone. I look forward to that $$ each year to spend on needed things.

so-beyond-broke

[bkfiler]

well, more then likely if it is spent then he wont get it. but we cant promise you that.

as far as why he gets it if he wants it has nothing to do wether you need it. you can probably exempt it anyways. i dont here people talking about that so im not sure that is the case. it sure seems like it to me.

[so-beyond-broke]

there's no way I can even go a Ch13 route

Hi Bk

There is no way I would be able to enter a Ch13, because I don't have an extra $166 a month or even $100 laying around to pay off all my creditors over 3-5 years. I am still stuck with a car payment at least to the end of this year unless I take my entire refund and pay off the car. But if I did this and filed Bk I can only exempt $2400 but since the car is worth $3400 I would end up having to pay the trustee $1,000 to keep it. I rather re-affirm the car. Why pay the bank $3700 to own the car free and clear and then have to pay the trustee another $1000 to keep the car I just paid the bank off to own. I am not made of $$, I only earn it. When my partner is working or getting his unemployment I can't expect him to fork over his entire check to me because he has his own bills and problems to deal with. It's nice when he can contribute, but it sure is not enough to enter into a Ch13. I have to be able to rely on my income, not his even if we are living under the same roof. We're not married so that really seems to complicate things. However, even married people file alone and not jointly.

So-beyond-broke

[SinkingFast]

There's really no spot for unmarried couples on the "Means Test". You're either married filing seperate, as in seperated. Married, not joint, as in one parnter is filing and the other isn't. Married, filing joint. And, unmarried. For the married folk who aren't filing with their spouse, spouse's income is taken out as a Marital Adjustment on Line 17.

I think you could file on your own, w/o your partner, but you may take a hit on expenses on Schedule J. You said your partner took over the apt from his parents??!! Then is the lease/rental contract in your partner's name only?? Or are you listed jointly as a renter as well?? If you don't have a lease, you may not be able to claim rent on Schedule J. You'll get to take the standard deductions on the "Means Test" but Schedule J shows a more detailed picture of your "actual" expenses.

To get a true picture of the value of your car, go to http://www.edmunds.com. Attnys here use that one over Kelly Blue Book because it considers more factors than KBB does. Down to the color of the vehicle. Some colors sell for more than others do.

[so-beyond-broke]

Thanks sinkingfast

Thanks Sinkingfast

I knew about the car exemption. Should I even bother listing my refrigerator or stove? I live in public housing and the frig and stove belong to my landlord. If they break housing is suppose to replace the items with one that works - not even a new one. I hate my frig. I don't think it works that great, but they feel that its ok because it was brand new 4 years ago when the entire building got new ones. I don't agree, but I need their permission to buy my own. When I move the stove and frig must stay, so I shouldn't include it in personal property even if its covered under the exemptions.

I like your screen name - it describes how I feel right about now

so-beyond-broke

I can help you with the answer to number 5. About your car.

Here's a link to the Forum thread about NY exemptions:

http://www.bankruptcyforum.com/t266-new-york.html

It looks like you shouldn't have a problem with keeping your car as far as the state exemptions go. Even tho it looks like the exemption for a car is $2400, you owe more than your car is truly worth. The $2400 would come in if you owned the car with no payments, or had more than $2400 in equity in the car. Example, the car is worth $5000 and you owe $2000. You'd have $3000 in equity and that's $600 more than your allowable exemption.

One thing to note about your car payment,........ When you have to figure the payment on Line 42 of the Means Test, you have to amortize the amount you have left on your loan over 60 months. So if you're paying a $500/month car payment, line 42 may only be a $200/month entry. We are still in the first year of a 5 year note and Line 42 is about $35 lower than our actual payment. People who are close to the end of paying their note car loan, or have a shorter note, will take a hit on that line.

On your income, keep in mind the new code works off an average of the last 6 months. If you were unemployed for a period of time and only went back to work 3 months ago, 3 months would be $0 (or whatever unemployment you may have had) in income. You'd add up the 3 months you worked, plus unemployment if you had any, and divide by 6 to get your monthly average income. You are correct that you take the annual amount allowed by the BK law and divide by 2 to get the 6 months wages for comparison.

You will have to ask an attny about including your partner or not. The Court may not allow it because you are not married. The new BK laws did not clearly define family and/or dependents. The BK law refers a lot to the IRS codes and uses stats from the Census Bureau. Both the IRS and CB have definitions of family/dependents/household units. The new BK law has no such definition that I've been able to find.

[bkfiler]

sobeyond, make sure before you think you qualify for something or not that you seek many free atty appts. you will learn a great deal fast.

[so-beyond-broke]

I have a lease

He took over the apt from his mother 23 years ago. I have been living in the apt for 15 years. My name is on the lease and family composition as the co-tenant/leasee. You can't just have anyone living in your apt in public housing - at least you are not suppose to. I thought about not listing my partner because I don't want the BK courts to think that I have access to his $$ because we live under the same roof and have kids together. Someone said to me that including him would actually "boost" the median income for the means test and when doing my budget it would just my spending for example food on 5 people compared to 4 people. I was also told that the trustee might not accept that my partner lives in the home and doesn't contribute anything to the house and we have kids. My income alone is nowhere near the median and with his income right now (UIB) its still not close. He could care less about his finances but I care and that's why I want to go the BK route, I just don't want to involve him if I don't have to.

so-beyond-broke

There's really no spot for unmarried couples on the "Means Test". You're either married filing seperate, as in seperated. Married, not joint, as in one parnter is filing and the other isn't. Married, filing joint. And, unmarried. For the married folk who aren't filing with their spouse, spouse's income is taken out as a Marital Adjustment on Line 17.

I think you could file on your own, w/o your partner, but you may take a hit on expenses on Schedule J. You said your partner took over the apt from his parents??!! Then is the lease/rental contract in your partner's name only?? Or are you listed jointly as a renter as well?? If you don't have a lease, you may not be able to claim rent on Schedule J. You'll get to take the standard deductions on the "Means Test" but Schedule J shows a more detailed picture of your "actual" expenses.

To get a true picture of the value of your car, go to http://www.edmunds.com. Attnys here use that one over Kelly Blue Book because it considers more factors than KBB does. Down to the color of the vehicle. Some colors sell for more than others do.

[bkfiler]

i dont think you get to choose too much if you file together or separate. i think it starts from who owns the debt that you are discharging. if you both own it then you both better file. if not then only you. after that it is a matter of applying the rules.

[so-beyond-broke]

I did visit Edmunds

Hi sinkingfast

I did visit Edmunds.com and that was how I got the value of my car which how I also found out that I owe more on the car than what its currently worth.

so-beyond-broke

[so-beyond-broke]

They are strictly my debts

Hi Bkfiler

The debts are strictly mine that I am trying to discharge. We don't have any joint accounts. The only thing that we are jointly responsible for are the kids. Since its my debt I should only include my income not his Someone did mention that all household income should be reported on the B22A. i have not read this form yet.

so-beyond-broke

i dont think you get to choose too much if you file together or separate. i think it starts from who owns the debt that you are discharging. if you both own it then you both better file. if not then only you. after that it is a matter of applying the rules.

[bkfiler]

ok then you will be filing bk and then the rules are the rules like was mentioned before.

it gets a bit complicated. community property state and things.

read this site to start with to get an idea about the terminology and start searching for your states information.

http://www.moranlaw.net/maritaldebts.htm