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BK an option?


upside_down
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In May of 2007, I bought a home for about $240K. As of this month, the home is worth about $110K. SO, I definitely don't want to keep the house.

I got married in July 2008. Our finances remain separate, no joint accounts or anything. She gives me $500 a month to pay for her share of the bills, and makes about $2400 a month gross. I know it is weird, but it works for us.

In May 2009, my employer started cutting our hours at work. I went from a gross of $6000 in May to a gross of $4300 now. I am paying my bills, but barely. My credit cards are $35K in debt, and I have sold most of the stuff I can to pay bills.

Income (Sept and Oct estimate, based on my schedule):

May $5990

June $4273

July $6897

Aug $4844

Sept $4466

Oct $4299

My secured debts are:

Mortgage: $1865 per month, taxes and insurance included

Car payment: $485 per month (according to KBB, I have about $1800 in equity)

CitiFinancial: $1466 owed, for furniture

Home Depot: $1603 for lawn mower (bought in July 09)

Working it out, I am over the means test to file Ch7 as of now, but it looks like I will pass the means test if I wait until November 1 to file, as that will make my disposable income $36 a month, using my previous 6 month's income to calculate.

My questions:

How detailed does my personal inventory have to be? Where do I get the value of each item from to calculate my exemptions? Do I include the furniture and lawn mower? Even if I turn them over to the creditor? What if the creditor doesn't want it?

What about my bills? Do I stop paying them when I file? If I do, what happens to the pay I earn between when I file, and when I am discharged? Do I turn it in to the trustee? If so, how do I get money to rent an apartment, for deposits and such?

Edited by upside_down
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Are you sure you are over after working through the Form 22 worksheet? You have to take into consideration ALL secured debts and many other deductions. I'd be surprised if you can't file. I have a close friend who made roughly $13,500/month and sailed through Chapter 7 last year thanks to secured debts such as his home and vehicles.

Nevertheless, you include all assets, including the furniture and lawn mower. The values of items other than vehicles and homes are essentially estimates. You would use comp values for the home and blue book for the vehicles. I'd stop paying on anything you plan on discharging. Upon the date of filing, future wages are NOT part of the bankruptcy estate, unless earned prior to the date of filing (ie: you closed a deal prior to the BK and they pay you a month after the filing). In this way, you should have plenty of time to accrue income and have sufficient down payment for a rental.

Edited by jq26
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Are you sure you are over after working through the Form 22 worksheet?

I used the NOLO calculator found here. I computed my average income over the last six months, and added the $500 a month I get from my wife, and that is what it said. I calculated it for filings in September, October, and November.

I think what i hurting me is that using my last 6 months of income, I get an average of $5,470 if I file in September, $5,480 if I file in October, and $5,128 if I file in October. (Not counting the $500 I get from the wife)

I want to file before December, because I get three paychecks in December. (Getting paid every two weeks means that two months of the year yield three checks- for 2009, that was July and December.)

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I assume the calculator is right, but make sure you "keep going" after you see that you are beyond the applicable state median income. That's where you will reduce your income the most.

I read somewhere that 97% of filers are unaffected by the "paper tiger" that is the means test. It just may be that you are in the 3%. Or it may be that you are not maximizing your Form 22 deductions.

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