a few questions - childcare, student loans...

[october99]

I've poured through these forums and been over everything in our expenses and budget. There are a few lingering things that I'm having problems understanding.

I am thinking of filing bk (I live in SC). All the unsecured debt is in my name. I'm not sure if I will qualify for a ch 7 since I have to consider DH's income. So the questions I have are:

If only I file, do I get to include an expense in his name like his vehicle?

Our student loans are in forbearance and will come out in Oct (me 179/mo) and Nov (him 367/mo). Will these count as part of our necessary expenses? Just mine or his too?

These two things alone may make or break a ch 7 for me. The students loans are what is pushing us to this point. I have about 32k in unsecured debt.

Finally, we have two children both preschool age. We pay one of their childcare providers in cash (occasionally by check) but I'm sure she doesn't claim the income. Will I be able to include this?

The other childcare provider is a preschool establishment that gives us tax documents stating tuition, etc so I'm sure I can include it, but they don't start back until Sept so will only be back for 2 months if I file in Oct.

How is childcare figured? An average? My folks have helped us through summer and I've taken time off work as well.

I don't expect to be able to file until Oct so as to avoid including March when we received tax refunds and bonus.

Our house is in my name only and has lost about 15k in equity. I now owe about what it is worth. We haven't decided what we will do with it yet.

I know I need to talk to an attorney (or three) and intend to do so in the next week. I just have a lot on my mind and thought I might get some input here.

TIA.

[SMinGA]

My understanding of how the other spouse's income works: you count the part that goes to household expenses - not the part they use for their own individual expense/debts. So your husband's total income would not be used.

For the childcare to the individual: expect a problem. For the pre-school, I would not expect a problem. In general, total up annual expense and divide by 12 for an average. For the individual, you're hurting yourself if you don't require her to report it. You lose the child care credit - and you could be held liable for failing to report it. (Not sure how that works...)

[starr4law]

It must be somewhat district dependent because in this district you count a spouse's income on the means test and there is a way to override the system to factor a spouse's secured payments (or at least vehicle expenses). The theory is that it is not an accurate picture to NOT count all expenses that are allowable (like an RV secured payment wouldn't be allowable) attributable to the household. However, you will need a very good attorney to work this out on your behalf.

Student loans are considered unsecured non-priority, so they are not factored into the means test at all. However, you can put a note on Sch J regarding the date that they come out of deferment if you wish.

Childcare is averaged out over the course of a year. So, you can take the 12 mo prior to filing to create an average (much like property taxes). However, the Trustee can take into account if the child care was ending very soon or changing drastically shortly (going from full-time care to part-time, etc.) and take issue with it. If you are paying someone cash, I don't know that I would use that figure - could cause problems for both you and the person doing the daycare.

[october99]

Thank you for the replies.

So hypothetically I could take his income and subtract things like:

auto loan payment
life insurance payment
student loan payments

Then use that for his income? Is this the type of situation that would need a good attorney to make it work?

As for the cash for childcare, say it is less than 1,700/year? Anyone have any experience with this? Btw the amount we pay for "preschool" care gets us some of the tax credit, but lets face it tax breaks or help from the govt when it comes to child care (or job protection for moms) in this country is a joke. I've reworked my entire career and life to accommodate this sorry child care system and keep my career intact and it isn't easy. /rant

[starr4law]

Not the student loan payments; life insurance might be restricted to term only; auto loan - should be able to (or at least the vehicle deduction, which is not the same thing). Also, there is a difference between child care and educational expenses for a minor child. That distinction is also district dependent and will make a big difference (child care is basically whatever you pay; educational expense for minor child is about $147/mo per kid max).