HELP! Interview was awful ...confused by information.

[mmo1]

Hey everyone, interviewed a attorney today and it went horribly.

Feeling very hopeless - could use some feedback.

Attorney told me first that we only qualified for a chapter 13 due to our income. When I mentioned that 50% of our debt was business related AND that the business debt exceeded the allowed debt limits for 13 - he told me to hire a civil attorney to get the debt lowered to a amount allowed to qualify for 13.

He then told me that the IRS guild-lines only apply in ch 13 cases - not in chapter 7. He said in a chapter 13 there is no leway in regards to expenses , but that in 7 we have much more flexibility.

He also told me the 6 month lookback does NOT apply when the debt is business related , just based on future disposable income. I had never heard that before - can anyone confirm or deny this?

HELP!!!

[LadyInTheRed]

I don't know anything about the business debt aspect. But, if the attorney is saying you don't qualify for a 7 based solely on your income, without looking at the second part of the means test which does use IRS guidelines, he is wrong.

Consult with another attorney or 2.

[catleg]

Normally it is better to have a non-consumer bankruptcy (debts are business related or related in some way to the production of income), because you don't need to pass the "means test" and there is no concern about over-median income.

This lets you do a chapter 7 (liquidation) which will be based on a budget exercise based on your projected income and expenses, known as schedule I and J respectively. If it's non consumer then you have more leeway on expenses, the same as if you're a consumer BK and below median income.

The only reason you'd want to do a 13 is to protect assets, or if you have a previous chapter 7 within 8 years, not sure of the number, and therefore aren't allowed another chapter 7 yet. There may be other reasons too, like certain kinds of debts that can't be discharged in a 7 but can in a 13.

[justbroke]

Time to shop for a new attorney. The Means Test certainly applies and if your attorney reads 11 USC 707, the part of the Bankruptcy code concerning the Means Test for Chapter 7, he'll read that it's based on the "IRS" allowances.

Also, it's strange that he wants you to "civilly" reduce your business debt. There is something real strange about this attorney. Reads like he likes to do Chapter 13s only.

You need to go find a Chapter 7 attorney who knows how to do a "non-consumer" Chapter 7. There is no means test for Chapter 7 non-business filers (like myself). The rules are totally different.