New to all of this...

[soscared123]

GoodMorning and thank you for reading my post!

I am new to this and have just started the process. Met with 3 lawyers and decided to go with one who is certified bankruptcy lawyer
and this is all he does. He believes I can qualify for a Chapter 7.

Here is my situation:
Live in Palm Beach County
Make 86,000
Have almost 60,000 in cc debt
own my own
all bills are current……but I have no money left over every month

I recently purchased disability ins, hospital ins and a cancer policy. I have not lowered my car insurance yet but I can if needed. I do also have a life insurance policy.
I quit paying all of my cc bills just this month.

Is there anything else I can do in this pre planning stage? I hope to give my lawyer a down payment on Dec 23 (Merry Christmas to me!)
and I have started getting all my paperwork in order and started filling out his paperwork re to expenses.

Thank you for any guidance! So so appreciated!

[TXskyblue]

My income and cc debt were very similar to yours. In my case, I have a high mortgage payment which really helped me qualify for a 7.

Are you contributing to your 401k at work? That's an easy 3-6% of your income spoken for if not.

What is your car payment? Your credit is going to suffer so buying a new car with a higher payment may be a good idea. I did that.

Are you working overtime? There is a 6-month look back so if you're working extra, stop. I did this and waited 6 months at the advice of my lawyer.

[tobee43]

we filed in florida, i believe you are in the southern district. your numbers do not sound right to me unless i can clarify something...you said "own my own". are you saying you own your home??? if so, you are not going to make it with your equity in that house. i'm just saying if the southern district is anything like the middle district you may be thrown into a 13. although you do not mention if you have dependents??

we filed mainly due to medical bills and job loss. you mention all the medical insurance you purchase, did your employer stop providing insurance? i'm just saying it is very likely that if you do own your own home in florida you will either be a 13 or an asset 7. just make certain you are prepared for that to happen.

best of luck and welcome to the forum!

[soscared123]

Thank you for the replies! TXSkyblue I have been reading your posts because I thought we were similar as well. OK. let me answer….

Yes, I meant to say I own my home and I am under water on it. Plus I have a HELOC which I pay interest only. That loan matures in 2 years. I bought the disability insurance to add to my expenses. The truth is I have been wanting to buy it but could not afford it. I'm divorced and it's just me so I need the benefits. I have a 24 year old son that just moved back home after school and has been unable to get full time employment so he lives with me and I support him for now. I own 2 cars…..2 car payments.

I do not work overtime…..well, I do but I am salary. I am not contributing to 401k because I cannot afford it. I guess I should start. I will fix that tomorrow.

Anything else? My lawyer feels confident I will be able to get a 7, but of course I'm nervous about that. And yes, it is the southern district of florida tobee43!

Thank you again! I am open for thoughts and suggestions!

[TXskyblue]

If you're at all worried about not making a chap 7 due to income, you should definitely start contributing to your 401k ASAP. Ask your lawyer about what percentage, but mine said 6% is no prob and sometimes up to 10%. Maybe it varies by district.

I'm a bit confused. Do you have a mortgage or do you own your home outright?

I'm not sure if you can claim 2 car payments, since you're single. That's beyond my knowledge. The car that's yours, though, is it older? Perhaps now (before your credit card lates hit) you can buy a new car. My car payment jumped about $100/m with a new car and that helped me get into my 7 as well.

Has your lawyer said if you will be an asset case? Asset cases get more scrutiny because the trustee (and other parties) see dollar signs and they want as much as they can get. I was no asset.

[soscared123]

OK, I'm going to go in today and see about contributing to my 401K. I just could not afford to do it and keep up with my bills.

I have a mortgage on my home plus a HELOC.

My car is fairly new…..it's a 2012. I cannot imagine I would be an asset case. I have nothing! LOL I used my retirement account to pay bills, everything I have I owe on and I own nothing worth money….ie jewelry. I can't wait to get some money to the lawyer so the means test can be done. Yes, I have done it online, but so many variables!

[LadyInTheRed]

Voluntary contributions to a 401k are not generally allowed as expenses on the Chap 7 means test.

soscared123, if your attorney is confident you qualify for a Chap 7, try to relax and let him do his job. Consult with him before making any changes to your expenses that you have not already discussed with him.

[tobee43]

i'll tell you this, we went to at least 5 attys in florida and most wanted us to go chapter 13, and we had only exempt incomes such as SS, State Pension, (not all pensions are exempt in this state), and UI (unemployment insurance. but because we made so much from UI from another state that is, florida's UI is nothing while our old state is sometimes over and up to $700 weekly, most of the florida attys thought that amount was outrageous and wanted us to file a 13. right, on temporarily income, had we gone with the wrong atty we would have had to convert once the UI stopped. incurring so much more in atty fees!! so be careful and do as LIR suggests. you have already gone to the attys and i would go with the one that feels the 7 is right for you if that is the way you want to go. however, as many people on this board can tell you, chapter 13's are not as bad for many with steady incomes or have their entire lives in front of them.

it sounds like you do have a mortgage and your house is underwater and very few assets. however, if you are not using your homestead even with your exemption your car if it's paid off may be an issue. shoot ours we thought we were going to have to pay the trustee, but ends up she let it go, as we walked away from our home and actually at the time we filed were just about homeless so we took the entire exemption for our car.

best of luck and make sure you keep us posted!

[soscared123]

Tobee……oh my gosh the lawyers in south fl!! The last one I went to told me to also stop paying on my house. He said since your mortgage is $1000 pay me $400 a month and let it go into foreclosure. I'll be your foreclosure attorney. That will buy you a year or two. Why would I do that I asked him. I have to live somewhere. Eventually my house will be paid off. I'm not moving from the area and my mortgage is cheaper then rent in palm beach county!!! It made no sense to me!
I decided then and there to go with the first lawyer.
Neither of my cars are paid off by the way.
Thank you Tobee.

[soscared123]

Hi Lady. Thank you for the response. I started the 401 today because it is pretax, thought it might lower my income. Am I wrong?

I'm going to stop adding expenses……you are right. I'm going to sit tight and pay the lawyer and go from there. Geez, I'm a nervous wreck! LOL
Thank you.

[tobee43]

Tobee……oh my gosh the lawyers in south fl!! The last one I went to told me to also stop paying on my house. He said since your mortgage is $1000 pay me $400 a month and let it go into foreclosure. I'll be your foreclosure attorney. That will buy you a year or two. Why would I do that I asked him. I have to live somewhere. Eventually my house will be paid off. I'm not moving from the area and my mortgage is cheaper then rent in palm beach county!!! It made no sense to me!
I decided then and there to go with the first lawyer.
Neither of my cars are paid off by the way.
Thank you Tobee.

your very welcome.

too funny!! but NOT can you imagine his/her other clients falling for that?? OH MY!!! unreal. i mean how dumb some think you are. wrong!! here in florida i think the average foreclosure must be at least 3 years. maybe more. i know of none less. doesn't mean there are none. i just don't know any. or heard of any.

[TXskyblue]

Voluntary contributions to a 401k are not generally allowed as expenses on the Chap 7 means test.

soscared123, if your attorney is confident you qualify for a Chap 7, try to relax and let him do his job. Consult with him before making any changes to your expenses that you have not already discussed with him.

You're right. I thought my attorney used my 401 on my means but he only listed it on schedule I. On form 22A (the means test) line 26, it specifically says not to list voluntary 401 contributions. I misunderstood.

OP, sorry for giving bad information. Have you looked at the preliminary means test done by your atty? What do the numbers say?

[soscared123]

You're right. I thought my attorney used my 401 on my means but he only listed it on schedule I. On form 22A (the means test) line 26, it specifically says not to list voluntary 401 contributions. I misunderstood.

OP, sorry for giving bad information. Have you looked at the preliminary means test done by your atty? What do the numbers say?

Not yet. My appt is January 17th. I needed a little more time to come up with the money. I have everything almost ready though. It's a lot of work finding all the necessary paperwork.

[LadyInTheRed]

I started the 401 today because it is pretax, thought it might lower my income. Am I wrong?

It will not lower your means test income. It may lower your DMI on schedule I, but that depends on the law in your district or circuit. In the grand scheme of things, contributing to your 401k is a good thing. Just don't count on it helping you pass the means test. Talk to your attorney about whether it will help fight an objection to a Chap 7 discharge based on totality of circumstances or help lower a Chap 13 payment. If you end up in a 13 and it is not allowed as a Schedule J deduction, you can always stop the contribution if you can't afford it and your plan payment.

[soscared123]

I met with my lawyers paralegal today and handed over all my papers/info. Spent all weekend getting it together! She said that nurses are the hardest to get qualified for a chapter 7, but she thinks I will make it. We will know for sure in a few weeks. Oh, and I have to get my 2013 taxes filed as well. I won't get a refund because I tapped into my retirement to pay some bills last year, but they still want me to file the taxes. Creditors have started calling. They are so nasty in the beginning of the phone call and as soon as I tell them I am filing bankruptcy and have a lawyer they all of a sudden become very polite. It's the strangest thing! Wonder what the psychology behind that is. Gosh, I hope I survive this!! LOL