Ejecting from a flaming credit airplane...

[flyinbroke]

An old pilot adage is "if the plane is still in one piece, don't cheat it. Ride the bastard to the ground." However, are you really going to be in one piece once you do that, or are you just postponing the inevitable crash. What is the highest point, what is the lowest point, and when should you punch out. Another adage is "there are old pilots and there are bold pilots. There are no old, bold pilots."

I cruised for years, one emergency away from blowing it. I finally blew it and stopped paying some CCs in November because the dog needed surgery and all of my cash went to paying CCs (balances were either tapped or CLDed into oblivion...no fallback.) This year, I owe the IRS a couple thousand. I stopped paying a couple more to start stashing away for that; something else came up...dog got sick again, car will need scheduled maintenance really soon. My student loan is coming out of forebearance and I pretty much got back all I paid off in interest. I realized that I was only postponing the crash and decided this month to pull the ejection handle.

I have my first attorney appointment this afternoon; the free consult. I liked both his website and his phone info line. He has been a BK specialist for about 25 years. He seems extremely knowledgable thus far, and prices seem par for the course around here (avg 19-2000 for a 7, 3300 for a 13.)

Am hoping I can qualify for a 7 but don't pass initial means testing and fear I will be stuck with a 13 and still living without any cash padding and no cards to fall back on in case of emergency (although at least I will be budgeted for food and utilities.) Yet I feel strangely euphoric about this appointment...is this normal? Any advice from the old hands at this?

[frogger]

Yet I feel strangely euphoric about this appointment...is this normal?

Yes. Feels good doesn't it? You finally have the beginning of a plan, and instead of crashing with that plane, you are strapping on a parachute.

Good luck.

[OhioFiler]

The decision to eject is the toughest part of the process for most people. It gets much easier after you speak with an attorney. Good luck to you.

[flyinbroke]

Well, I decided to be an old pilot instead of a bold one. I guess it is hard to get past the emotional aspect even if you are a master compartmentalizer like I am. Doing the math, there is no way I will ever crawl out from under, I won't be seeing a raise for a loooong time, and I anticipate expenses going up (I talked my way out of a 300 dollar rent increase but doubt I will be able to do it again come lease renewal time) and most of my big bank cards are opted out which means closed and/or unusable.

I am really, really hoping for a 7...will wait and see what the attorney has to say. On average how many attorneys did you go to before picking one?

(Thanks in advance all...my turn to be a big PITA regarding questions now that I know pulling the handle will be okay in the end.)

[momisery]

We tried 3 attorneys, and the last one was the one we took. The first one said a 13 from doing a form for us, the second one wasn't sure and was really busy. So, the third one looked at our stuff and laughed. He said a 7 was the only door open to us, we did not make enough money to worry about a 13. Not sure why the other two were having issues?
I feel better now that it is all over with, but I am still in denial too I think. If I don't think about it, I feel better. I know we did not have a choice, but going forward my concerns are what if something happend again and we do not have CC to fall back on, nor can we get a loan. But the answer to that is, well.. we were not paying for it before really, we felt responsible, but we weren't. So, we will use the ER.

[DebtStinks]

I spent a ton of time on these forums and the web researching the bankruptcy laws. Each bankruptcy circuit has their own view on some of the laws and things can be different even between the courts in a circuit. This is where it is nice to have a really good attorney that knows your local court well. What you can get away with and what you can't is very important in a successful filing.

If you are over the median income then you REALLY should take some time and learn the ins and outs of the means test. Most of the online means test you find just suck and are very hard to use. I ended up writing my own so I can could easily run though various scenarios in my planning. You can try it out here as I never did take it down:

http://www.johnfire.com/meanstest/wizard.php

I had my means test down and I knew I would pass, which the courts didn't even question. I'm now discharged and closed. BUT... part of my "test" while trying to pick an attorney was to see how they handled my data. I went to 7 free consultations with what I deemed to be the best in my area. The sad thing is 4 out of 7 reviewed my situation and just flat out said that a chapter 7 wouldn't work and I'd have to file for chapter 13. I'd then give them a copy of how I filled out my means test and just told them "Wow, I must have done something wrong. Where did I mess up?" Of course none of them where able to find anything wrong and just sat there looking confused. One guy got pissed and said "Well you clearly don't need me do you..." and got up and walked out of the room. I think some of these guys just don't want to deal with the extra work that an over median case takes.

But I did finally find a guy that I liked and knew his stuff. We were 20k over the median income and our case couldn't have gone any easier. But this is one of the most important things you'll go though in life... don't leave it all in the hands of some attorney. Take control over it and make sure it gets done right... second chances aren't easy once you file.

[flyinbroke]

Thanks, the calculator shows me that someone is on crack...where in the hell can I find a place for 740 a month in rent? Even commuting an hour away meant spending 900+ for a one bedroom unless I wanted to live someplace where getting robbed and killed is the option they prefer.

I got "presumption of abuse arises" as my income is about 30K over the median for one person. I suspect that a skilled attorney will work with other figures to determine disposable income...there is nowhere to put things like student loans, which are not dischargeable no way no how.

[DebtStinks]

I haven't updated some of the IRS numbers... but for my area they are still VERY close to the new ones. You can find the current data here:

http://www.justice.gov/ust/eo/bapcpa/meanstesting.htm

But ya some of the IRS number might be low for where you live. Line 21 of the means test lets you add an adjustment to the the values in lines 20A and 20B. You just need to make sure you can document these additional costs.

Did you run though the entire test? What was your line 51 value for 60-month disposable income? If you are 30k over your median income you might be screwed for a chapter 7 unless you have some secured debt (home, car). Student loan payments are unfortunately not allowed in your means test calculations. But you do include them in schedules when you file (which isn't much help if you can't qualify).

[keepinitreal]

Debtstinks - thanks so much for allowing us to use your program. It's very much appreciated!

[flyinbroke]

I only have a car, and owe about 10K on it. No house (couldn't qualify because I had too much debt) so stuck with a rent payment several hundred dollars higher than a mortgage would have been.

Income is based on salary, military retirement and VA disability. My line 51 value for a 60 month plan was around 90K. I am screwed if I have to file CH13 because I will never have cash available for emergencies...and emergencies pour on you when you have no means to cover for them.

[catleg]

It's only after we've lost everything that we're free to do anything.

[flyinbroke]

Well, even the attorney said I would be teetering on not being able to afford the BK. WIth no dependents or deductions, a 13 will take over 50 percent of my net pay. I will bring home, after paying the 13, about 2200. My rent is over half of this. All told, it will leave me with around 700 a month for insurance, food, utilities, incidentals, pet care and any emergency that rears its ugly head.

Any advice? He gave me four other options:

Chapter 7: Did not remotely come close to qualifying. No kids, no house, no deductions at all.
DMP: He said flat out that I would not be able to afford what a DMP would want. Owe too much to make it work.
Debt settlement: of course we all know the risks there. Have to wait for chargeoffs before most will settle.
Do nothing: THe "screw it" plan. Alas, they don't all go away into that good night and many will sue.

[DebtStinks]

Going to be hard with your 60 month disposable income at 90k. You need that to be below $6,575 or below $10,590 if you can pass the secondary presumption determination. So you would need somehow add or find an additional $1,390 a month in allowed expenses on the means test.

It's difficult to advise without having more information. Like how much unsecured debt you have, any secured debt and payments, student loan debt and payments, etc.

Some parts of the mean test to double check are:

Line 21: If you can document that actual costs in your area are higher than the IRS local standards for housing and utilities then put that extra there.

Line 22A: If you put in your car payment on the secured debt page this should be filled in for you ($201 for a single car).

Line 23: This should also be filled in for you based on your car payment.

Line 25: Make sure you put in your average federal and state taxes

Line 32: Home and cell phone cost

Line 34: Health insurance. This is one area that people let go so they can make their debt payments. Health insurance should be more important than making a credit card payment. You can start up health insurance and put the value here.

Line 39: If you can prove that food and clothing expenses exceed what the IRS has for your area you can add a few bucks here (can't go over 5% of the IRS allowances). Should be like $18 max I think.

[flyinbroke]

This was using the attorney's computer: apparently I have 2400 in disposable income, which is far more than I predicted; makes the 60 month 144K. So I am back to square one for a while, while I mull at my plan of attack. I am not being sued, I live in a state where wages are protected (though bank accounts are not) and I have nothing to give them.

Right now my "pay some and blow off others" is netting me 1400 extra a month, which I am putting aside for taxes, and paying off small (200 and 300 dollar) CCs, building an emergency fund and paying off insurance. The 13 does not account for how insurance will go up with a crap credit score, or the fact that my rent will shoot up come renewal time and I doubt I will be able to talk them down this time.

[DeadManCrawling]

On the rent front, what about offering them a larger deposit, and explaining the deal, in advance. That may buy you some bargaining power, by acknowledging the issue before they find it on their own, and may make you a winner over the long term, at least in that case.