How bad of a mess am I in?

[ChefScott]

I've been reading here a LOT, and here is what I am looking at...

In 2006 my wife an I started a small business in Western PA with money that was loaned to us by her parents. At that point we were already riding the debt roller coaster. Business does fair through 2008. 2009 business really starts picking up and moving, our ability to start repaying all our debts is looking really good. In late 2009 my wife passed away.
The property (building and land) was being financed via the landowner (large final balloon payment in 2011), at a very nice rate. I could no longer run the business by myself. The landowners had someone interested in the property and urged me to let this person have the property on Assignment. I did do this. I sold all the equipment and supplies to pay off the debts the business had. For the Assignment I got one payment at the time of the paperwork signing. And am awaiting the final payment of the same amount.
I have several judgments from various CCs, and other non-secured debt along with student loans that have gone into collection.
Since my wife passed away I have not worked, my focus has been on raising our 8 year old son. The only income source I have at this point is the Social Security Death Benefit (I really loath that name.. ). He is starting school this fall (he was home schooled when we had our business, but I can not do that by myself either), so at that point I will be able to get a job that would be at the most part-time (and I'm not sure if I'm emotionally or mentally ready for that yet), as I have no one to take care of my son once school is out.
The only expenses other than food, clothing and gas I have is my cell phone bill and insurance for my vehicle. I am also paying down the balance on a CC that my wife had through the business. We live in an apartment that is attached to my Father-in-Law's house. He is out of town working 90% of the time. I am fortunate that he allows us to stay rent/utility free, and will also pick up the "tab" when I am really low on money or when there is anything my son needs.
I have an appointment with a BK attorney on Tuesday. He is aware of this and has said no problem with a Chapter 7. But this is the initial meeting. I did a pre-interview with 5 different attorneys via e-mail, one got back in touch with me a week later letting me know he was on vacation. Three other never replied back to me. One spent over an hour on the phone with me to end up at a dead end when they said that they would need my Father-in-Law's previous three years income tax returns (why would they have need for his returns?).

I'm already on a rough ride in my life. I would have never imagined that I would ever be without my wife. I had at one point thought about filing Chapter 7 "pro se", but after reading all the bankruptcy laws, my head and heart said get an attorney.
I know all Chapter 7 cases are different, but am I looking at any "snags" in what I have here? If I feel good about my face to face with this attorney on Tuesday, I will be paying him his full fee on the spot (thanks to my father-in-Law).

[SeattleBK]

I don't know what to say/add other than I'm so sorry for your loss. Your story really touched me, and I feel so sad about your situation.

I do think you are on the right track and that you should file bankruptcy. I believe that you are correct in believing that the most important thing right now is your son, and finding a job under the circumstances comes second.

Also, although, I'm pro-pro se, with the business situation and trying to deal with past events it probably is better for you to use an attorney.

[wonderingrov]

Hi Chefscott,

I am sorry to hear about your wife. It sounds like you have really been through a lot.

You are on the right track as far as hiring an attorney. The biggest thing there is to make sure they understand all of the issues surrounding the financial situation you are in - and it sounds like you are doing everything you can to make them aware of that. The better they understand your entire situation, the better they can advise you.

I wish you well as you try to find work, and hope you have better days ahead.

[keptdigging]

Most of the attorneys I contacted did not get back to me. Then I stumbled on one through an internet ad who was very email oriented and has turned out to be great. I know it's tough (and I don't have your personal issues) but keep trying. I was worried that my numbers (they're high) were freaking out attorneys but my attorney says my case is relatively uncomplicated. I think that a lot of bk attorneys get contacted by a lot of people that aren't serious--so that if business is good, they think it's a waste of time to answer all the queries.

The FIL is probably relevant as part of the means test for a Ch 7 since you're living with him and he's helping with expenses. Unfortunately I don't know anything about this area.

But keep trying. You need to focus your work efforts and future income on raising your son, not paying off banks. The banks don't need your money and your son needs it and the rest of you.

And count your blessings. Seriously. I have a 9 year old son who is the most important thing in my life but lives 500 miles a way. Obviously I cannot comprehend your loss. And I hope you'll forgive me for this perspective. Because when I see a man who gets to raise his child I see a man who is blessed.

[Beeheery]

Chef and Kept, you both have brought me to tears. I'm so sorry about each of your (different) losses. We often hear about single mothers and their struggle to raise a child alone but we rarely hear about single fathers. I also cannot imagine having a child but not being able to see them. Heart-breaking to say the least.

[nohope]

I applaud this man for wanting to raise/and raising his son. I am a single mom of three, two have serious disabilities Unfortunately, their dad basically walked away from all the children when he filed for divorce many years ago. The acceptance of one wanting to spend time with their children to raise them is nil. Single parents are expected (income is imputed to them and they're accused of being under-employed) to work full time. No one cares about the impact that has on children.

[keptdigging]

Just to clear up the impression I gave... I do see my child once a month, and for an extended visit over the summer and since we've been doing it all his life, we're close in our way, despite his mom's efforts to subvert our relationship. But reversing the time and raising him would be my dream. And obviously I do not get men who just disappear from their kids' lives.

Thank goodness I didn't get stuck in a chapter 13... I could just see some UST calling my travel to see my son an unallowable luxury.

[ChefScott]

So I have paid my attorney! He said that I should not worry, it will all be fine. But, and this is a big one... I truly feel that I would be able to also get my student loans discharged as well. Is this detrimental to a Chapter 7? I realize that it has to be filed as an AP, along with the other paperwork. I have poured over the "Brunner" test that is used. I easily "pass" (how sad is that?) all three parts of the test to show a "hardship":

1: Minimal standard of living - I currently receive around $1000 per month in SS Suvivors Benefits. This is my entire monthly income at this point and has been since November 2009. I have no mortgage/lease/rent, due to living with relatives. I pay for my cell phone, vehicle insurance, gas, food (for 2) with the SS money. Before the month is over, my relatives help pay for the food we need. If it was not for them, my son and I would be out on the street, living in our van.

2: Additional circumstances exist indicating that this state of affairs is likely to persist for a significant portion of the repayment period of the student loans - Now with my Mother-in-Law passing away in January 2009, and then my Wife passing in November 2009, I am alone to raise my son. The best I will be able to do for several years is part-time work that will be at best minimum wage... less than $145 per week take home. My son is who I live for now. I will only be able to stay here for at the most another year, and then have to move and incur rent/lease payments and utility payments.

3: Good faith efforts to repay the loans - My loans came due back in 2002. I managed to make the payments for about 2 - 3 years. Money became tight at this point. I put the student loans into a cycle of deferment after deferment, then I missed getting the loans back into deferment and they have gone to collections. They are going to now take my benefits ($500ish) to pay the loan, and that is just one of the two. Funny thing is if I had been able to make payments all along I would only have a little over two years left to pay. As it is right now I owe more in my two student loans than what I borrowed to begin with!

I am not looking to duck out of my student loans, but for whatever reason my "Disney" life is just not happening (eating butterflies and pooping rainbows!). I'm 47 and have nothing now. They say "Hindsight is always 20/20", boy are they right. If I could do it over, I would have not ever gotten those "indebted servitude" student loans. They have really been made to be pure evil, when life takes that wrong @#%$& turn.

[tcreegan]

Student loans

Hi ChefScott,

Couple things about student loans:

....inability to pay is not a hardship.
....minimal depends on the federal poverty level in your area, not on what you are paying
...significant portion of repayment period is the rest of your working life; ie. after your son is grown up
....good faith effort to pay loans is usually longer than you think, and the deferment periods don't count

You are going to have to prove that you have a medical condition that prevents you from ever achieving the income of someone in your field. Then you have to prove that the highest level of employment possible for you will put you well below the federal poverty line. Staying home to raise your son is honorable, but will not count for discharging students loans.

The Brunner test looks easy on the surface, but if you research court opinions you get a rude awakening. They interpret it much harsher than an avg person would.

I hope you go for it and succeed, I will dance in the streets for you!

But I don't want you to go in unprepared, it is tougher than it looks...

Tom in Colo

[oregonpilot]

Chef....I too shall dance in the street for you. Having a hard time typing through the tears.
I thought i had it tough.
Best wishes to you and my thought are with you.

[Pandora]

Chef - so sorry for your loss, my heart goes out to you and yours.

I just wanted to add that perhaps you can look at whatever aid is available to you (food stamps, utility assistance, free lunch at school, daycare assistance, rent assistance, etc). With only receiving $1K a month, I'm almost certain you'd qualify for some if not all programs in your area.

God bless you and yours. Stay strong.

[sscott4775]

Chef,
My heart goes out to you and I'm deeply sorry to hear about the trouble you have to go through. Please stay strong and everything will work out in the end.
And I agree with what Pandora said...you should be able to receive benefits with that income.

God Bless!

[ChefScott]

....inability to pay is not a hardship.

Correct, but at the same time my income has been permanently decreased by 50%. This is definitely not my choice to have had happen.

....minimal depends on the federal poverty level in your area, not on what you are paying

I am well below the level in my area. Sad, but true. My wife and I were the Mom-n-Pop business that was a part of this country's working poor. Even with using the federal and state programs for assistance, I would still be below the poverty level.

...significant portion of repayment period is the rest of your working life; ie. after your son is grown up

This is the one that confuses me the most. To me that would fall into that dark thing called indebted servitude, would it not? At 47 years old, I will be 56 when my bird is ready to leave the nest. My student loans are already 9 years old.

....good faith effort to pay loans is usually longer than you think, and the deferment periods don't count

Actually, from what I have been reading on the subject seems to point that the use of deferments and/or forbearance does count towards good faith on the part of the borrower. It seems to show to the courts that the borrower is keeping the loan(s) out of default when in times of financial hardship.

You are going to have to prove that you have a medical condition that prevents you from ever achieving the income of someone in your field. Then you have to prove that the highest level of employment possible for you will put you well below the federal poverty line. Staying home to raise your son is honorable, but will not count for discharging students loans.

This is one of the tough spots for sure, you have to be either permanently disabled or dead. I really did not remember signing up for military service!

The Brunner test looks easy on the surface, but if you research court opinions you get a rude awakening. They interpret it much harsher than an avg person would.

That is what I am doing now, reading all the rulings on cases I can find. I honestly do think even with the courts harsher interpretation, I just might stand a chance.

I hope you go for it and succeed, I will dance in the streets for you!

But I don't want you to go in unprepared, it is tougher than it looks...

Tom in Colo

I thank you so much for what you have posted. It will help me to see this from a different perspective, and look at those angles as well. Please do not take what I have posted as hostile, it is not intended as such.

I sent a letter to the loan holder as a part of their review process and of course they denied deferment and/or discharge. Which does not really surprise me at all. But in their letter of denial here is what they offered $150 a month starting in 30 days or they will take my Social Security Survivor Benefits ($504). At the end of each month I am already on the minus side by about $200. Now if they do actually take the SSSB that will put me on the minus side by $700 each month. And that would be after a successful Chapter 7. So how does one truly get a "fresh start" when you have student loans?

But my underlying question still remains... is filing an AP for this detrimental to a Chapter 7 BK?

[tcreegan]

Go get em!

Please do not take what I have posted as hostile, it is not intended as such.
Absolutely not offended

It will help me to see this from a different perspective, and look at those angles as well.
This was my intention! I do not want you to go to battle ill-prepared....I seriously hope you win. I agree w. the comment about student loans being 'indebted servitude' And then Congress decided to help us all out by declaring private student loans non-dischargeable.....guess you know whose side they are on.....

There are some encouraging cases, and some where they did not discharge the whole amount but discharged it down to a reasonable level.

Go git em ChefScott !

Tom in Colo

[nerves]

One thing you may want to verify - since the SSDB is a govt "income", can they really garnish it? If the loans weren't govt loans (through a private lender), I am not sure they can garnish. Just some food for thought.....

I wish the best for you and your son's new beginnings after this is all over with.

Nerves