Thinking about BK, need some thoughts

[Oklahoman]

I went through a divorce last year that has really hurt me. I work on a commission based online job and have for years now.

After the divorce, I had to find a home and my parents helped me by getting a house for me and for me to make payments to them (better credit rating). I now have a large credit card bill, two bank loans, one new car loan and I don't know when the next commission is coming in.

I get paid a little a month working part-time at another job, but it's not enough. I am already late on the CC bill and one bank payment.

What are the steps to file? I guess more or less, will I have to provide bank statments and past taxes, etc? I haven't find any site that just shows you exactly what you have to do.

I feel overwhelmed. Thanks.

[SinkingFast]

About the best place to start is here:

http://www.usdoj.gov/ust/

There is information there about the Means Test, the Median Income, Schedules allowables for expenses, etc.

Here's another website that goes thru the basics of the New Law:

http://bankruptcy.findlaw.com/new-bankruptcy-law/

You can also get a lot of good information at http://www.nolo.com/.

New Law changed everything. You can't just say you want a Ch 7 and get it. You must qualify for it. That's based on how much you make, where you live, what you're allowed to spend, and to some extent, your actual expenses for other things each month.

If you don't qualify for a Ch 7, filers under the Median can get a 3 year payment plan. If you're over the Median, you'll most likely be placed in a 5 year payment plan. Payments are based on your disposable income.

You cannot consider, as expenses, any payments for debt you are looking to discharge in the BK. Like your CC payments. Those aren't considered in your monthly expenses as you will be discharging those debts in the BK.

You will have to provide 6 months of pay stubs, at least the last 2 bank statements, copies of your income taxes for up to the last 4 years, and any other documentation the attny wants to have on file in case he gets audited by the Court. For us that included our mortgage, our rental lease, our life insurance policy, paperwork on a small retirement Hubby has left, if you have IRA's or 401K's, they'll want that documentation. It varies from attny to attny. But by the time we got done handing over docs, the stack was over 2 feet tall.

Your housing loan situation with your parents is gonna raise some serious questions, I would think. Family and friends are considered "Insiders" by the Court. And payments to "Insiders" are considered preferential payments.

The look back period on anything in BK is 1 year, but on major financial moves, the Court can easily look back 2 years.

So if your parents are paying the mortgage and you are, in essence, reimbursing their expenses for the mortgage, that could cause problems. If you had a Lease in writing with your parents, and possibly the payments were being handled by a Property Management company, and your parents were claiming the income from the payments, and filing the appropriate tax documentation for having a rental property, that would be a different story. But straight out payments to your folks, money under the table, so to speak, that's gonna be a potential problem for you. The Court could view that as Preferential Payments made to Insiders and go after your parents to return all the money you've paid to them.

Your best bet is to call several BK attnys and schedule appts for Consultations. Consults are free and you'll learn a lot from each attny you speak to. Each one will offer different information and advise.

You may have to learn what your options are and take some time to do some prep work before filing. I'm not suggesting do anything illegal, but you may need to square away some questionable issues before you approach filing BK. Like maybe you'll have to move into a rental situation. A house or an apartment. So the home you're currently living in won't be an issue with the Court.

Also, if you haven't already, stop using your CC's. There's a 70/90 day rule about cash advances/convenience checks use, and charges. If you file within that period, the burden of proof falls on you with the Court. Outside that time period, the burden of proof shifts to the Creditor.

[djk]

first thing I would suggest is to determine if you qualify for a chapter 7 case, if you do and would like some help here try to be as specific as possible with your situation. If you don't qualify for a 7 just go to the 13 section.