Need some advice

[Jwt0620]

Hey everyone,

I have been lurking here for a few days just trying to get some information on a potential bk filling. Have always had 700-800 credit score, perfect payment history on everything that I have ever had. Never really had super high paying jobs usually 50k-70k a year, but never really lived outside of my means. I am married to an amazing woman and we have a 3 year old son. I have always been blessed no matter the circumstances.

My mom has severe health issues ( cancer, copd, manears disease, legally blind in one eye, had had several strokes) and the list goes on, she is a strong woman. I also have a younger sister who has learning disabilities and a few other problems. Long story short I bought a house last year so they could move in with myself, wife and son so they didn’t have to struggle and worry about their house falling to pieces and how they were going to get to dr appointments.

I have managed to rack up right at 30k in cc debt and a personal loan, my wife has around 15j in cc debt. With everything we have going on we are no longer making ends meet with the price of everything. We are considering filing bk. It’s a shameful thought but unfortunately I don’t know what else to do.

1. she babysits for a friend and does nails for income out of our house. she started this year would this be self employed?

2. she had a part time job last year but we forgot to file her W-2 in this years taxes it was around 6k dollars. Would I need to file that first?

3. My mom gets ssi around $750 a month, she has her own bills she’s pays but she does pay the power bill for me, and helps a little with groceries. Would that be included in household income? Even though it would not effect the means test for being over.

4. I have read that Wells Fargo will freeze your account if you file bk, even if you just have a checking account. should I go to another bank?

5. I am in the process of talking to attorneys to try and find one we are comfortable with. Prices have ranged from $1500-$3000, would a higher priced attorney be any better than a cheaper one?

6. we have around 30k in equity on our house would that be safe?

we are going for a chapter 7, I think we are around 30-40 k under median for a household of 5 in North Carolina.

thank you for reading this long post and any help/advice would be greatly appreciated.

[justbroke]

Welcome to BKForum.

1. she babysits for a friend and does nails for income out of our house. she started this year would this be self employed?

All regular income is income for purposes of bankruptcy "means testing" and for calculation of the disposable monthly income (DMI). All spousal income is included even if they are not filing. Certain amounts can be deducted using the spousal deductions but only if they are not filing with the other spouse, and only to the extent that they have separate debts.

2. she had a part time job last year but we forgot to file her W-2 in this years taxes it was around 6k dollars. Would I need to file that first?

If she is filing as a joint debtor, yes.

3. My mom gets ssi around $750 a month, she has her own bills she’s pays but she does pay the power bill for me, and helps a little with groceries. Would that be included in household income? Even though it would not effect the means test for being over.

There is not "really" such thing as household income in bankruptcy; only spousal income. To the extent that Mom contributes to your expenses, you may need to reduce your expenses. For example, if the bankruptcy code allows $1,400 a month for food and your Mom contributes $400, then you can only take a $1,000/monthly expense despite the allowed amount of $1,400.

(NOTE: there is a concept of "household size" used in bankruptcy and you should be able to use the number for any dependents claimed on your tax return and for any elderly parents that you help. Household size helps with the calculation of the median income. It appears that you are already below the median, so this may not be a big factor for you or it has already been calculated into your means test.)

4. I have read that Wells Fargo will freeze your account if you file bk, even if you just have a checking account. should I go to another bank?

They have been known to do this. It is always suggested that someone not have deposit accounts where they have credit products. It also seems to be the current wisdom to not keep money in Wells Fargo if you're about to file bankruptcy.

5. I am in the process of talking to attorneys to try and find one we are comfortable with. Prices have ranged from $1500-$3000, would a higher priced attorney be any better than a cheaper one?

Not necessarily. However, the price should be commensurate with the complexity of the case. The average case that is simple will be $1,500. The more complex then it will approach and can exceed $3,000 for a Chapter 7. For example, if you're doing mortgage modification mediation, student loan discharge, or there is an adversary proceeding (complaint), or similar complexities.

6. we have around 30k in equity on our house would that be safe?

Probably since the NC homestead exemption seems to protect $35K in equity for a single debtor and it can be doubled if both spouses file a joint bankruptcy and are both on the title. There is also an increased amount for senior citizens. I think you should be well within the range, but seek more assistance from a local BK attorney in North Carolina. Watch out for vehicles that have equity.