first meeting w\attorny-please help!

[dadof5]

I am completely confused now. Here are the basics.

I make 80k
cc debt 37k

my take home (net) is $4,700mo.
My mo. debt is over $5,800 (house is $2,500 alone)
Our only secured debt is our house (we owe $231k) which has about 15k equity at the most and of course cc debt.

Here is what we were told.
We can't file a 13 because our debt far exceeds our income and we can't file
a 7 because we are about 11k over the means test.

We do have 2 cars paid for valued around 15k

We were told to refinance the house on a 30yr (it's a 15 now) and reduce our
debt by $1000 then we could file the 13.

I realize no one can give great advice because of all the variables, but does this sound about right?


If someone takes the time to read this and respond
THANK YOU!!!

we are so confused and scared right now!!

[SinkingFast]

We can help better with a little more info.

How many people in your family?? What State are you filing in?? How many years left on your mortgage??

About the cars,............. How did you arrive at the values?? Are they newer cars??

In addition to extra info we may be able to help you with,......... You'll wanna call and schedule a couple more Consults with a couple different attnys. Get some different perspectives on your situation.

[dadof5]

ok, sorry..

6 people, live in KY and we have 12yrs on a 15 (refinanced) 1st mtg
14yrs left on 2nd mrtg

The car is a 2005 Hyundai and the truck a 2001 (SVT Lightning) which holds it's value extremly well. We paid them both off w\refinance. I know now, bad move.

We were doing everything possible to keep our bills paid, refinance, borrowed from 401k etc.. so here we are now.

My biggest question is he said a 7 is out of the question because of my income. I thought their was still a chance.

Thank you!

[Keebler]

I'm going to chime in here because I think I understand. Someone please correct me if I'm wrong...

The difference between Chapter 7 and Chapter 13 boils down to this: With your unsecured debts forgiven, will you have money available each month to repay part of your debt. If there's no money available at the end of the month after living expenses, you may file Chapter 7. If there is money available, you will file Chapter 13 and enter in to a repayment plan for the portion of your debt that your income allows you to repay.

Means test: If your income is above the median (middle) income for your area, you must pass a Means Test to show that you have living expenses that are within reason for your area. For example, if you are filing because you can't afford the payment on your mansion and the Bently, you have unreasonable expenses and you are presumed to be abusing the Bankruptcy system. I believe the Means Test will primarily keep you from filing Chapter 7 if you faul due to unreasonable expenses.

When (and if) you file, you will need to show your actual income and actual expenses. Again, if discharging your debts will leave you with money available at the end of the month after your living expenses are paid, you are expected to pay whatever amount your expenses allow.

Below is an excellent book you can read on-line and it'll answer tons of questions you probably have...

THE TACTICAL
BANKRUPTCY MANUAL
BY NICK C. THOMPSON

[dadof5]

he didn't even do the means fully just the basic we have 6 people and it allows 71k and I am 10k over that. He said that alone will prevent me from filing a 7.

we will get a 2nd opinion from another attorney.

I think I understand though how filing a 13 woudn't even help us much becuase we still couldn't live within our means after cc debt is gone.

i really dont know right now..

[SinkingFast]

That attny may well be right. Could be in your area, the Court really pushes on "Over the Median" filers.

BUT, you'd really need a complete Means Test run to know for sure. Could be your Mortgage payments are such that it would eat up your excess and allow you to file a Ch 7. Here's a Means Test Calculator for you:

http://www.legalconsumer.com/means-t...ator/index.php

Just plug in your info and you'll get a good idea of where you'll stand on the Means Test.

Where you're gonna run into trouble is possible excess equity in your house AND the equity in your vehicles.

KY allows $5K Homestead and $2500 for Motor Vehicle Exemptions.

http://www.kentuckybankruptcy.info/exemptions.html

You'd have to check for sure to know if the Exemptions can be doubled if both you and your spouse file.

Since Ch 7 is "Liquidation" BK, you'd have to pay the Trustee the difference between what you can cover with Exemptions and your actual equity value.

Equity in your house is Fair Market Value less reasonable costs to sell less your mortgage. You'd need a current appraisal to determine if you have excess equity that you cannot cover with your Homestead Exemption.

Call 2-3 Realtors, act like you're thinking of selling. They'll give you a good ball park number of the current market value of your home. And you can get that for free.

The cars,........... You're most likely gonna have excess equity.

BUT, just because you think they're worth $15K doesn't mean you'd wind up paying the Trustee $10K to keep your cars. ($15K value less $5K, if you file joint and can double, Motor Vehicle Exemptions) The Trustee has costs to sell. Generally sells quick and does not get top dollar. Very often, Trustees would rather settle than seize property. It's faster and easier.

Get a couple more opinions and see what other attnys have to say.

[dadof5]

thank you for the advice, we are getting another opinion but I think he is right after digging into this.

We contacted someone to see what they can do with our 2 home loans, i.e. combine and change to a 30yr (instead of 15). I guess i will put the truck up for sale.

To make things worse I purchased some camera gear about $1,500 last month, still thinking we would not be here, to start shooting weddings. I stopped long ago but I can make descent money with it. I learned, of course, that in a 13 I can't do that, and I guess now the trustee will think I went on
a buying frenzy....

we are sure in a mess.