New here need advice

[debtfree4me]

Hello everyone, I've been reading the forum for a few weeks on and off. Without giving too much history a job loss set me back quite a bit on my CC's. After dealing with the stress I decided that I've had enough. So about a month or so ago I reached out and contacted a few attorneys. Because of where I live I don't have many so I contact two that seem to have a good reputation. One of them says I qualify for CH 7, even though my free consultation did not go as planned, (I didn't have all my financial paperwork together.) The second attorney I did not do a "free consultation" so instead we had most of our conversations via phone and email. He says because of my income I wouldn't qualify for CH7 and he seems adamant about a CH 13.

To be honest I'm not quite feeling a CH 13 though anything is better than nothing. I rent, I'm single, no children besides 2 dogs, so from my reading I don't see how a CH 13 would benefit me. Also the income with my new job is not the same as the old, as I was making about 10K less than. Unfortunately because I was laid off from the other company I don't have access to my pay stubs.

Now the issue is I like both attorneys, BUT, the one the mentioned the CH 7 is a bit late in getting back to me. The attorney that recommended the CH 13 gets back to me like instantly. I'm really trying to get the BK done before things "blow up" Right now I'm in the early stages of just calls and letters. So I want to be prepared.

If you were in my situation what would do? Should I go ahead with CH 13 or the CH 7? Besides my CC all I have is my student loan, car loan $2000 left, and don't have many assets as I live VERY frugally.

I have yet to pay either attorney. I've also tried to contact others but have yet to hear anything back. Hopefully that will change now that the holidays are over with.

Thank you for your time.

[LadyInTheRed]

Welcome to BKforum!

It sounds like the first attorney didn't have all of your information. Did the second attorney have more info than the first? Did the second attorney run a means test or just hear your income and tell you that you don't qualify for a Chap 7? (It sounds like the second attorney did give you a free consultation, even if not in person.)

Is your gross annual income based on your income over the last 6 months more than the median in your state? That's 49,689 for a household of one in VA. http://www.justice.gov/ust/eo/bapcpa...come_table.htm. If you are over median in the last 6 months, is your current income below or above median? If above, by how much. How do your expenses compare to local and national standards? They can be found at http://www.justice.gov/ust/eo/bapcpa...anstesting.htm

Contact your former employer and get copies of all of your paystubs from July on. You will need them. The fact that you were laid off should not prevent you from getting copies.

I suggest you consult with at least one other attorney. Be sure to bring complete info on your current income, last 6 months income and expenses. Don't wait too long for call backs. Call again if they don't call you back. In the mean time, if you answer the above questions, we may be able to give a little more input on your istuation.

Can you pay off all of your unsecured dischargeable debt in 5 years or less without filing BK? If not, a BK probably makes sense even if you have to file a Chap 13. The means test is based on your income in the 6 months before you filed. If you had a period of no income, you will probably want to file while that period is still within the last 6 months. That will increase your chances of passing the means test. Timing could be very important for you. So, don't delay.

[debtfree4me]

Thank you for the warm welcome Lady in Red,
I will try to answer your questions without getting to wordy/lengthy.

Yes with the second attorney I was able to provide the necessary paperwork save the last six months from my other job. I’m not sure if he ran a means test at all. Correct. With the first attorney I had left my folder at home with all my financial information. However when I did go the free consultation there was a mischedule so another person and I had an appointment with the same attorney at the exact same time? So he just said whoever fills the paperwork out first can come into his office. The other client finished the paperwork first and went in. I didn’t go in until later ( 2 hours after they closed at 5,) Whether or not it was a sign who knows……..

He told me if I had any more questions to email him, I did, with a few more questions. He answered them within 3 days I believe. Then I had remembered a few more things I meant to ask him but at that time, he said he would be able to provide more information after I hire him. Oh and that took about a week after I sent him another email asking if he had gotten the email stated above.
Anyway before my current job now my annual income for was roughly $41,000. I’ve been at the new job for about 3 months. My current income now is $52000.

Ok, luckily my former employer is within close proximity from my other job, so I will swing by there and see if I can get some copies.


Believe BK was the last option I opted for, I considered consolidation ( with bad credit impossible), taking a second job I live in a very rural area so I have to travel more ( more gas spend, taxes, putting me further beyond my budget) etc, struggling/balancing which bills to pay and CC’s to rotate. I even tried negotiating with creditors, via asking for lower payment plan or change of date. I dealt with it for about 2 months hoping things would get better, but living in constant worries about overspending on my already frugal budget, no savings, etc. Not mention falling further behind…… I just had enough……….Mentally I’m drained and the sleepless nights I lost I will never get back, nor the stress.
I told the attorneys in the beginning if there was a last means before BK to let me know.

However both agreed that I at this point I am sunk and a BK would be a better option. In fact the attorney that recommended CH 13 said I lived too frugally....lol. Made me feel good.

If there is anything to add let me know.

[LadyInTheRed]

I misread your first post and thought you were now making less money at your new job. Your new job puts your income over median. You are probably better off filing asap. Once you have the pay stubs from your old job, you will be able to see what your annuallized income was for July through December. If it is still below median, you should try to file BK before the end of January.

The reason why the attorney said you live too frugally is that you may be able to pass the means test, but your actual expenses that would be up on Schedule J could be so low that a trustee would object to a Chap 7 because based on "totallity of circumstances" you can pay something to unsecured creditors in a Chap 13. Ironically, living frugally is not a good thing when you are on the boarder of qualifying for Chap 7. You need an attorney who underestands that Schedule J is forward looking and doesn't necessarily have to reflect your frugality while paying on unsecured debt you will no longer have. It sounds like the attorney recommending Chap 13 may not be the right one. If the first attorney said you qualify for a 7 based on your current income, he could be okay despite his meeting scheduling issues and slow responses. I suggest you meet with a couple more.

[debtfree4me]

Thank you again for your response Lady in Red and its fine. I am going after work to get the pay stubs if they haven't closed ( we have a "winter storm advisory" ) Hopefully they can pull them up. I want this done ASAP, which is why I started researching a few months prior before things blew up.

That's very interesting about frugal living. When I filled out the paperwork for the CH 13 attorney regarding my income he had things like "entertainment" and other "personal" expenses. I had to tell him numerous times that I didn't have a budget for those type of things and what little money I had I would help cover the cost of the next month. So I have not brought clothes ( right now I patch holes in them lol) , repaired and kept up maintenance on the rental house, etc. Mind you this is with my current job. At the moment I was trying to build an emergency savings fund, in case things go south, but I might have to put that back until this matter is resolved.

Ok, I have started contacting other attorneys and will just have drop the savings until I can get this matter under control. Since I have to do a couple hours of driving. This is my first time going through something like this so I want to be sure things go smoothly and that there are no surprises.

Again I very much appreciate the dedicated response by the forum. I shall keep you updated on the progress.

[LadyInTheRed]

Sounds like it is time to sit down and create a reasonable budget that includes things like entertainment, clothing and other reasonable living expenses you have been avoiding. The prefiling credit counseling course which you have to take within 6 months before filing will help you come up with a budget. There are also plenty of internet budget resources. A good attorney will also help with your Schedule J budget. But, it helps if you go in with one.

[gcorrell]

LadyInTheRed...I'm totally new to this BK thing...am I right to assume the income is your Net income if you are self-employed (for determining below/above median)? I am paid 1099 about 50K/yr but put 50K miles on my vehicle and have a 27K tax write-off on my Sch C on the 1040.

Also, if below median, can I assume then I pass the means test no-questions asked??

Thank-you

[keepmine]

Sounds like it is time to sit down and create a reasonable budget that includes things like entertainment, clothing and other reasonable living expenses you have been avoiding. The prefiling credit counseling course which you have to take within 6 months before filing will help you come up with a budget. There are also plenty of internet budget resources. A good attorney will also help with your Schedule J budget. But, it helps if you go in with one.

I'd agree. Here's a link to a site that will help with schedules J.

http://www.legalconsumer.com/bankruptcy/means-test/index.php

[keepmine]

LadyInTheRed...I'm totally new to this BK thing...am I right to assume the income is your Net income if you are self-employed (for determining below/above median)? I am paid 1099 about 50K/yr but put 50K miles on my vehicle and have a 27K tax write-off on my Sch C on the 1040.

Also, if below median, can I assume then I pass the means test no-questions asked??

Thank-you

You use your previous 6 month gross for the lookback.
As we've stated so many times, passing the means test is only the first step. You still need to fill out schedules I and J to determine if you have sufficeint monthly disposable income to fund a 13.
See the legalconsumer link I posted a few minutes ago to the OP in this thread.

[bcohen]

Chapter 13 is for people who have assets to protect, especially real estate or vehicles. It is a waste of money to file Chapter 13 if all you have are unsecured debts, especially if the largest of those debts is student loans. If you decide that bankruptcy is in your best interest (as opposed to doing nothing, defaulting on the debts and seeing if anything happens) then I suggest you find an attorney who can make a Chapter 7 work.