Met with Attorney (in FL btw)

[ccidiot01]

Met with attorney this morning who gave me some very good feedback and a little info that concerned me.

Background: We are over the Median income and have to complete the Means test.

Concerns: Attoney said that we would have to have receipts for every expense (food, medical expenses, etc.). I told him that we pass the means test when we simply use the allowances provided by the IRS tables (adding NOTHING extra). He responded that for food/living expense we had to prove that we met the IRS allowances...I thought this worked like your taxes, you can use the "standard deduction" or "itemize" which ever is to your benefit...again I thought that is how the living expenses allowances worked...please help.

Promising news: To pass the means test we have to keep both vehicles. We'd like to ditch one. He said that we can keep the cars for the means test (provided they are current) and then "change our minds" after we've filed if we decide to let one go. Does this fly, can you put off a reaffirmation agreement until after the 341?

Anyway, thanks for the info!

[SinkingFast]

Met with attorney this morning who gave me some very good feedback and a little info that concerned me.

Background: We are over the Median income and have to complete the Means test.

Concerns: Attoney said that we would have to have receipts for every expense (food, medical expenses, etc.). I told him that we pass the means test when we simply use the allowances provided by the IRS tables (adding NOTHING extra). He responded that for food/living expense we had to prove that we met the IRS allowances...I thought this worked like your taxes, you can use the "standard deduction" or "itemize" which ever is to your benefit...again I thought that is how the living expenses allowances worked...please help.

It could be, the area you live in, people typically don't spend as much as the Schedules allowables on several things. Courts tend to get used to seeing certain numbers for certain family sizes. A family of 6 typically spends $600/mo for food. That's all the Trustee is gonna allow even tho your Schedule allowable is $1000/mo for a family of 6. If you really do spend more than the Court is used to seeing, you'd better be prepared to produce receipts to prove your claims.

Could also be that you met with an attny who's trying to push you into a Ch 13. Many attnys will do that because they make more money. Get you to file Ch 13 now for a higher fee. Then you can't make the plan payments, so you come back in a couple of years to Convert to a Ch 7.

If you haven't Consulted with more than the one attny, you should. Chat with at least 2 more to get different perspectives about your case.

Promising news: To pass the means test we have to keep both vehicles. We'd like to ditch one. He said that we can keep the cars for the means test (provided they are current) and then "change our minds" after we've filed if we decide to let one go. Does this fly, can you put off a reaffirmation agreement until after the 341?

Under New Law, you don't simply deduct what your current payments are. You have to amortize forward 60 months. That can significantly reduce the $$ amount of Secured Debt payments on car loans/month if you've had the car loan(s) for a couple of years or so.

We don't have any loans to reaffirm, so we haven't really gotten into Reaffirmation with any attny during a Consult. To the best of my knowledge, the Reaffirmation simply has to be filed sometime before discharge is granted. Whether or not a Reaffirmation can be revoked under New Law, I do not know for sure.

Anyway, thanks for the info!

Hope this helps!

Maybe others with more experience regarding Reaffirmation will chime in.

[ccidiot01]

Thanks for the response. Makes sense about the expenses...

He was not trying to push us to Ch 13. He was just trying to prepare me to "document everything". In fact, he was a bit down on Ch 13 for the reasons you mention, some people end up back in Ch 7.

We have an appointment Monday with another atty, so I'll be interested to get her feedback.

[SinkingFast]

Receipts are VERY important. You might want to start keeping every receipt for every purchase you make, if you don't do that type of thing already.

Some people here use Quicken or Excel to set up a spread sheet of their expenses. When you come home from Wal-Mart, break out food from household/cleaning supplies and enter it on your list.

We tracked our expenses for a couple of months so when we finally chose our attny, we could say we spent $350/mo on gasoline and such. This is back to school time, so don't forget the kids' books and class fees, sports participation costs, etc.

The attny you've already seen probably gave you a list of docs to collect together. Start working on that. Most attnys want the same things on file. Then each attny will want additional, different types of docs. So start collecting all that stuff together as you go along. Then, once you're ready, you'll have your attny picked out and your docs assembled together.

[ccidiot01]

Thanks again.

We have already started collecting receipts and tracking our expenses. I've set up a spreadsheet to keep it organized.

The Atty told us he would need the standard: 6 months of pay-stubs, 4 years of tax returns, 6 months of bank statements, 6 months of creditor statements, etc.

I have a another question: Wil the trustee understand why our expenses for groceries/clothing, etc. have increased over the last two months? Basically, we have been unable to buy clothes/school supplies/adequate food while trying to pay all the debts (in fact may parents and in-laws spent several hundred dollars on these items last week). Once we retain counsel, we will stop paying these debts and that will open up $$ to buy the necessities. Will the trustee question why we spent $1500 in Aug and Sept, but had not in any of the previous six months? One of many concerns...

[alh]

I was in a situation where I had very low expenses as a result of being unemployed for an extended period of time. The first couple of lawyers I saw tried to force me to use the expenses I had when I was out of work and the income I had when I started a new job. It made it look like I had a large amount of disposable income.

Finally saw a lawyer who was a trustee and I was able to list expect expenses with no problem (they were normal and reasonable)

If you have expenses out of the norm, you will have to justify them typically, especially if you are over the median.

The new law is so poorly written thought that there are huge gray areas that only now some court intepretations are coming. out.

Meet with several lawyers, including at least one that is also a trustee if at all possible.

[SinkingFast]

We ran into the same problem on clothes too. Because we were paying minimums, we only bought what was absolutely necessary in the way of clothes for a couple of years. When we divided by 12, it worked out to where we only spent $50/mo for clothes.

Our attny and his paralegal were very reasonable about that $$ amount for Schedule J. The paralegal looked up the Schedules allowable and put a * by the clothing expense amount. She did that in several areas as well. * meant they could pull more money, if needed, based on Schedules allowables or what the Court expected to see in an area.

In your case, you spent $1500 recently,.......... Just add that to any other clothing expenses you can recall from the last year. Then divide that by 12 for a base number to go into Consults with. The allowable for your area may vary higher or lower.

[ccidiot01]

I guess my concern is that it will be impossible to recreate many of those receipts. But we'll manage.

The attorney said that our area, Middle District of Florida, is very busy and really doesn't have the time to dig too deeply unless they see something that looks like gross abuse.

I think we can still pass the means test using our current info...we'll see.

Thanks again for all the help.

[SinkingFast]

One thing to keep in mind is the 70/90 day rules. 70 days on Cash Advances or Convenience Checks use. 90 days on CC charges.

You want to wait to file until after you've passed those marks on the calendar. Within the 70/90 days, it's up to you to prove you didn't use the CC's with the intent to file BK. After that time, the burden of proof shifts to the Creditors.

You're still making payments so you're in no danger of being sued by the CC companies. Even if you were to stop making payments this month, you'd have probably at least 6 months of time before you'd need to start worrying about a Creditor coming after you legally.

There is no rush to file. Take your time. Gather your receipts and your docs. Do your filing right from the start.

[ccidiot01]

Yeah, we're looking at filing Oct/Nov.

The only thing that has gone on any credit card is a few tanks of gas in the last two or three months and a rental car (though that will be off by Oct.) and no cash advances ever.

One positive is that we can retain an Atty now, refer the creditors to them and still take our time gathering information and file in a few months.

[ccidiot01]

195205629-fb-793

I'm not sure I understand this...sorry for my ignorance.

[SinkingFast]

I'm not sure I understand this...sorry for my ignorance.

Quincy was a Troll. Just ignore that posting.

[ccidiot01]

Attorney #2

Met with second attorney this morning. After my meeting with Atty #1, I was much better prepared on what Q's to ask.

At any rate, she has worked with several "new-law" Chap 7's that exceeded the median income for Florida. This made me feel much better since Atty #1 had only one such case.

We met for an hour and she went over our debt and income and expenses and felt very good about us getting through the means test with no problems.

Like Atty #1, she agreed that we could always change our minds before reaffirming any debt and that it would not change our means test (assuming no audit).

She was also very upfront that we will have to explain a large car payment ($800/mo) to the Trustee. After we discussed the specifics, she said it would likely go through fine.

Having worked several mean's test cases in the Middle District of FL, she said the trustees are very apt to take our reported expenses as long as they fall at or below the IRS standards. She said we should not "kill" ourselves with receipts for food/clothing etc. (unless we were going to claim more than the standards). She did advise that we keep receipts for medical expenses, dance lessons, etc. Any expense out side the "norms"...

To end a rather long post (sorry). I liked that she had experience with cases like ours and had worked with our trustees. Likely the route we will go (and her fees are in line with the other atty's in the area).

Now time for a yard sale to pay the atty...

Thanks again for all your feedback!

[alh]

There is a BK blog written by an attorney in Orlando you may want to check out

http://www.bankruptcyorlando.com/

[ccidiot01]

Thanks alh. That is one of the sites I've explored while doing research. It some pretty good information.