I am considering filing

[DaleM]

This is going to be a bit long I am afraid but I want to get all details out there so I can get some good advice.

First, I have always paid my bills, never missed a payment once in my life.

A year ago my wife filed for bankruptcy. Her filing did not affect me at all since we do not have any tied assets or credit cards. I was in bad shape too but we thought by eliminating her debt we could double up on mine and be fine. We were wrong.

In the past three years I have had about 12 months of unemployment and took on about $1000 in medical bills - down to $500 now.

Current situation:
-Wife is working (she makes enough to cover rent, groceries, and gas).
-I am unfortunately unemployed again - just over two months now - but looking for work everyday.
-We have enough money to get through January, afterwards we are going to start defaulting.
-I have no major assets other than a couple cameras worth about $2500 total (I am a part time photographer as well as network administrator - so I make a little money with these.)
-I do not own a car
-we are renting our apartment
-This year alone I have had four months unemployment due to relocating and volitile job market.

My total credit debt is $25,000.

Michigan had a horrible job market and at times the only way we could put food on the table or fuel in the car was to use credit. We have never had an extravagant life style.

We always hoped things would get btter and they just have not. The house of cards is about to implode and I need to know my options.

I should have filed when my wife did but we seriously thought the job market would get better and we could pay these off.

Do laws differ from Michigan to Illinois?
What are my options?

[HHM]

I think you answered your own question. Being unemployed does not really give you any options but filing BK. Your probably in the perfect position to file BK and the type of person for whom the BK laws are meant to help.

[DaleM]

I called an attorney today.

Chap 7.
Attourney fees: $1250
Court Fees: $ 299
Credit counseling: $ 100 (debt counseling & Financial Responsibility)

Total: $1699

Does this seem right?


BTW, Michigan, my home state, has the highest unemployment rate in the USA. Even Oprah talked about it.

[HHM]

That sounds about right, give or take a $100.

[SinkingFast]

Since you are current on your payments, there's really no need to rush to do anything.

Take your time. Research and learn about BK. Consult with several attnys. That gives you a chance to get several different perspectives of your situation. Plus you get to meet several different people. See who you'll be comfortable working with.

Your accts, if they are primarily CC debts, will take a few months to move from regular customer service to internal collections. Then a few more months to be placed with an outside collections agency. You should easily have 6 months to a year before you'd have any threat of law suit or legal action.

Also, working in your favor is the fact you own no major assets and you are unemployed. Creditors don't just sue on a whim. They investigate to see if you're worth while to go after. Some big asset like a home or an expensive auto to place a lien against. A decent income to attach a wage garnishment order to.

Just want you to know you are not at all in any sort of rush situation. No one's foreclosing on your home possibly forcing you into the streets and you have no legal action pending against you. Plus, you need to at least wait out the 70/90 day period on Cash Advances (70) and CC charges (90).

So you can get prepared to file BK as you continue to job hunt. Who knows,...... You may land a great paying job in a couple of months. Be able to take care of all your debts. And down the road, the only thing that will show on your Credit History is a few delinquencies.

[DaleM]

I met with an attorney tonight, apparently I do not qualify for Chapter 7, possibly do for 13.

I am not sure whaqt I am going to do now. I have 27k in debt. Apparently the fees involved with 13 amount to qalmost 4k, so I would be paying back 31k over 5 years. I wonder if I may be able to do that anyway once I get working. but what do I do between now and starting a new job?

I was not really depressed before but certainly am now.

[lrprn]

I met with an attorney tonight, apparently I do not qualify for Chapter 7, possibly do for 13.

I am not sure whaqt I am going to do now. I have 27k in debt. Apparently the fees involved with 13 amount to qalmost 4k, so I would be paying back 31k over 5 years. I wonder if I may be able to do that anyway once I get working. but what do I do between now and starting a new job?

I was not really depressed before but certainly am now.

I'm wondering if all you are working is some part-time photography and networking jobs and you've had months of unemployment, how can you possibly be above the MI state median income plus pay back as much in a Ch 13 as you would have to pay back in a Ch 7? How did this lawyer justify that you had to file Ch 13 rather than Ch 7?

Set up at least 2-3 more consultations with bk-specialty lawyers - some bk lawyers are better than others. Check out http://www.nacba.org/attorneyfinder/ for a listing of qualified bankrupty attorneys in your area. If you can find a attorney that is also a trustee or was a trustee, then you've hit the jackpot! The list of current local trustees by state is at http://www.13network.com/ . Cross-check both lists to see if there are any names in common.

Don't despair. Keep interviewing attorneys and keep us posted on what you find out. Good luck!

[SinkingFast]

I met with an attorney tonight, apparently I do not qualify for Chapter 7, possibly do for 13.

I am not sure whaqt I am going to do now. I have 27k in debt. Apparently the fees involved with 13 amount to qalmost 4k, so I would be paying back 31k over 5 years. I wonder if I may be able to do that anyway once I get working. but what do I do between now and starting a new job?

I was not really depressed before but certainly am now.

How in the world does that attny think he/she could get a Ch 13 Plan Confirmed if you do not have regular income right now??!! Or in the forseeable future??!!

In order for a Trustee to Confirm a Ch 13 Plan the Trustee has to reasonably believe you have the ability to meet your Plan Payment obligations. If you don't have a steady job, there's no way to reasonably expect you could afford to fund a Ch 13 Plan.

This attny sounds like the first one we went to. Never compared our income to the Median. He was Ch 13, full steam ahead, all the way. If we'd have gone with him, we would have been in a 5 year plan paying $195/mo. Instead, we were just Discharged from a Ch 7.

Call some more attnys. Make some more appts. Get some different points of view.

[DaleM]

Apparently in Illinois, even though my wife has absolutely nothing to do with my credit issue legally they consider total household income in which case we are above the 52k limit.

My total debt: $27221.39
Our monthly bills not including food, fuel, clothing, or other life needs: $1441.83

My income this year $33565 <-- 20.5k was earned in the first 6 mos of the year. the remaining $13k earned in the last 6 months of the year with zero earning for the past 2 months.

Wifes yearly income is $35k and she has student loans of $200 pr month. She files Chap 7 last year.

I am building a spreadsheet with all information so I am better prepared for the next lawyer.

I moved to Illinois in June. The lawyer I spoke with is in Illinois. I am going to cal several more lawyers tomorrow in Michigan and Illinois.

Thank you for the support.

[lrprn]

Apparently in Illinois, even though my wife has absolutely nothing to do with my credit issue legally they consider total household income in which case we are above the 52k limit.

This is how the new bk law has been interpreted by the courts for the Means Test income calculation.

My total debt: $27221.39
Our monthly bills not including food, fuel, clothing, or other life needs: $1441.83

Start looking at ALL your family's living expenses. Here's a good list of typical living expenses to work from - http://www.ca-bankruptcy-attorneys.c...alculator.html . If you've been spending less than normal trying to get by, remember you can claim what's reasonable for your community.

My income this year $33565 <-- 20.5k was earned in the first 6 mos of the year. the remaining $13k earned in the last 6 months of the year with zero earning for the past 2 months.

The only thing that matters for both of you is what you each earned in the six months prior to filing - in MI the median income for a 2-person household is $49,080, and if you have children, that increases that figure (see http://www.usdoj.gov/ust/eo/bapcpa/2...come_table.htm ). Only the last six months of your mutual income will count, and that's why SF and I believe your first lawyer may well be wrong saying you have to file Ch 13. You need to check with other bk lawyers who can evaluate the full picture of your finances.

I am building a spreadsheet with all information so I am better prepared for the next lawyer.

Good idea!

I moved to Illinois in June. The lawyer I spoke with is in Illinois. I am going to cal several more lawyers tomorrow in Michigan and Illinois.

Since you haven't lived in Illinois for the last two years, you will need to file using Michigan exemptions. Luckily Michigan allows you to use the federal bk exemptions if that works better in your case - see http://www.bankruptcyinformation.com/exemp-fed.htm for the federal exemptions and http://www.bankruptcyinformation.com/MI_exemp.htm for Michigan exemptions.

Thank you for the support.

Glad we could help! Please keep us posted on what you find out as you continue to meet with the different lawyers, and post any sticky questions that come to mind - we'll do our best to help you figure things out.

[SinkingFast]

Dale,..........

You can file in IL. In fact the Law says to file where you live. But, because you have not lived in IL for over 2 years yet, you're gonna have to use MI Exemptions. That might make finding an attny a bit tougher. Out of State Exemptions frazzle some attnys.

Since your wife recently filed BK,......... If you were talking to the attny about filing Joint, that's probably why the attny said Ch 13.

Maybe you need to consider filing alone. The Median Income for 1 person in IL is $41,650/yr. Based on your income as you reported, you fall below that level. And, attnys are supposed to use the last 6 months prior to filing for the CMI.

The tough part then, would be figuring out your expenses.

[DaleM]

She sad that, "even though you are filing alone illinois requires total household income be considered". I feel there were some communication issues and assumptions on her part - like she thought I was getting a devorce even though that subject never came up.

I am working on my spread sheet and have some hard numbers for the next person i speak with.

My total income for 2006: $33,940
Income for the last 6 mo: $11,875
Wifes gross income: $35,000
Wifes income 6 mos: $17,000

My total debt: $27,221.39 ($674 pr month)

Monthly expenses-
Rent, rent ins, phone, cable, electricity: $1,441.83

I have zero numbers for food, clothing, entertainment, etc.

I am going to continue working on this using some of those links above.

[SinkingFast]

Sounds like this attny needs a lesson in "How to Complete the Means Test".

These instructions apply to Form B22A:
When you're filing alone, YES, both incomes are reported at the start.

Then on Line 2, you'd check Box C, Married, not filing Jointly.

Your total income, both you and wife, is reported on Line 12.

Line 12 gets carried down to Line 16

BUT, then, on Line 17 you get the Marital adjustment. If you checked the box at Line 2.c, enter the amount of the income listed in Line 11, Column B (Wife's Income) that was NOT regularly contributed to the household expenses of the debtor or the debtor's dependents.

Subtract Line 17 from Line 16 to get the Debtor's income which gets filled in on Line 18.

Voila! You are below the Median, and the rest of the Means Test is just subtracting out Local Standards or your real expenses as applicable.

I'm guessing this attny figured you wouldn't know better and he/she would unwittingly sneak you into a Ch 13.