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Considerations before filing for Chapter 7


txgirl
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I am debating whether or not to file for Chapter 7. Many people I have spoken to have advised that I am a good candidate for one. I've read a little about the new laws. Due to that, I have a couple of questions for someone who may know the answers.

1. My boyfriend and I have been living together since March of this year. We split the rent and utilities. Will I be required to report his income along with mine as well as the rent and utilities we share?

2. I currently have a 1998 Dodge Ram, NADA value at $13,000, and has been paid for. It is officially mine. I also have a 1991 Nissan 240SX I currently owe on it at $700.00. I believe Kelly Blue Book is at $1200. If I file for Chapter 7, will I have to "give up" the truck?

Thanks in advance.

--txgirl--

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To answer your question you need to know the Tx exemption statutes. As written a person may exclude personal property of an aggregate fair market value of not more than $30,000, exclusive of liens, security interests, or other encumbrances if it is owned by a single adult.

Property may include (among other items) a two-wheeled, three-wheeled, or four-wheeled motor vehicle for each member of a family or single adult who holds a driver's license or who does not hold a driver's license but who relies on another person to operate the vehicle for the benefit of the nonlicensed person;

As I interpret this you may exempt the truck, but the net value of the Nissan, $500, would need to be turned over to the trustee to pay unsecured creditors.

If you file Chap 7 and are doing so individually your boyfriends income does not come into play. If you file Chap 13, only your income is considered but your expenses would be reduced by his contribution to household expenses.

If you are eligible for Chap 7, only the net value of your non exempt assets will be available. From what you've said, this appears to be $500.

If your income is below the Texas Median income for a single person, $33,280 you qualify for Chap 7. You may also file for chap 13 and propose a plan for repayment of unsecured creditors at a significantly reduced amount. Again, if eligible for Chap 7, a Chap 13 plan would be for three years, with monthly payments to creditors unless Chap 7 would payoff a larger percentage of your debts. Filing for bankruptcy is a serious proposition. Get organized and know where you are in terms of ability to pay as well as what you want to accomplish as a result.

The most important question you need to ask yourself is 'Why am I in this position?" What is the reason I have spent more than my income and is this situation resolved?" Until you have found the source of the sore, and eliminated it: until you have resolved to live within your means and determined you have the ability to do so, bankruptcy will only provide temporary relief and you eventually be right back in the same predicament. Hope this helps, good luck.

I am not an attorney, If I have given erroneous information here, someone PLEASE jump in and correct my errors.

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As I interpret this you may exempt the truck, but the net value of the Nissan, $500, would need to be turned over to the trustee to pay unsecured creditors.

Not necessarily. TX does specifically exempt 1 vehicle per licensed driver up to that 30K limit that covers all your other property. That doesn't mean you can't also exempt the Nissan, or, if you really want to keep it, you can always offer to Redeem it - pay the Trustee. I seriously doubt, however, that a Trustee will bother with something that low in value.

For the truck, though you can exempt it, I wouldn't go with NADA prices. Get a couple of quotes from car dealerships and then subtract the cost of any necessary repairs. If you can get the quotes in writing, even better.

As for the boyfriend's income, I suggest you ask a BK lawyer. HOUSEHOLD income could be a factor. If he can cover ALL your living expenses, such as rent, utilities, and food, leaving more of your income free to pay creditors, then that could be a factor. Only a lawyer in your area can really say for sure what's going on in TX BK courts right now.

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