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Experience:  Attorney in the practice of Bankruptcy Law since 1996
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My wife & I are over $70,000 in credit card debt. This does

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My wife & I are over $70,000 in credit card debt. This does not include over $10,000 in medical bills(and still climbing). We are being HOUNDED everyday by the debt collectors.(I refuse to talk to them (ie. SCARED). We are considering bankruptcy, but have heard it is next to impossible to get a Chapt 7. Our GROSS income is around $75,000 a year. Our bring home is around $4900 a month with our bills totally around $4800(this does NOT include credit cards or medical bills);just our BASIC cost of living(car, taxes, insurance, food, utilites, meds, etc etc). Have NOT talked to an attorney yet, but figure they will try to force us into a Chapt 13. Have heard this is a HORRIBLE experience(NOTHING left over each month for emergencies, car trouble, applicances breaking down, etc etc). Would like an attorneys opinion on what THEY think we should do???
Submitted: 5 years ago.
Category: Bankruptcy Law
Expert:  JoeLawyer replied 5 years ago.
Hi WideGlide:

Not knowing all the details, I am still inclined to agree with what the attorney you met with told you.

The attorney said you would probably have to file Chapter 13 and that you would live "comfortably." This is probably true with a $75,000 gross income. Basically, according to the Means Test, a household of two people in Texas has to make $55,859 gross income or LESS to qualify for Chapter 7, and since you make more, you will likely be required to file Chapter 13 (see the U.S. Trustee website showing how much gross income a family can make by State, HERE).

Basically the Means Test is a formula; your income is plugged in, then your taxes, insurance, medical expenses, etc, and the IRS standards for living expenses are plugged in, and at the end it tells you how much you have to pay to the Bankruptcy Court each month for 60 months. At the end of the 60 months, you are out of debt even if you payments only equaled a small percentage of your total debt. The question is not how much you owe, but how much you can afford to pay back. The Means Test is supposed to generate a payment amount low enough to let you still make all your monthly bills, though it is still usually higher than people expect (but better than not filing bankruptcy at all).

Since your wife is facing back surgery, it is a good idea for her get that out of the way, THEN file bankruptcy. If you file bankruptcy BEFORE the surgery, and she gets stuck with $100,000 of new medical bills from the surgery, those bills CANNOT be discharged in your bankruptcy since the bills were incurred after your case was filed. So, you "save the silver bullet," meaning you wait until all the medical bills are incurred, THEN file bankruptcy so you can discharge them.

Hope this helps. Any other questions please let me know!

Joe

LEGAL NOTICE: I am only licensed to practice law in certain state(s) and I cannot give legal advice to someone who does not reside in a state in which I am licensed, nor shall anything I say in the above answer or elsewhere on this site be deemed legal advice, even to someone who resides in a state in which I am licensed. Fees I receive for answering questions are paid for information, not for legal advice. This forum is designed to provide general information only, and information herein is not warranted to be correct or applicable in any way since laws may have been misinterpreted herein, since laws change from time to time, and since the impact of those laws on any particular situation varies. The information presented in this site shall not be construed to be formal legal advice nor the formation of an attorney-client relationship. Persons accessing this response are encouraged to seek independent legal counsel in their jurisdiction for guidance regarding their individual circumstances. Do not take any action or inaction based on information presented herein since it is informational and may not be accurate or applicable to you; it merely attempts to give you a basis of knowledge to help you formulate questions to ask a legal or other professional in a face-to-face meeting in your jurisdiction. Joseph Ross does not hold himself out to be a specialist or expert in any area, regardless of assertions made by any third party, and any implication of being an expert or specialist herein is made in error. I hope the information presented above is useful to you. Answer above is (c) Joseph Ross. All rights reserved.
Customer: replied 5 years ago.
Thanks Joe for the answer. A little bit more info request. So, our BRING HOME salary does not fall into the picture? I believe they are suppose to look at our last 6 months of income and use THAT as a starting point? Correct?
Expert:  JoeLawyer replied 5 years ago.
No, the link I gave you to the U.S. Trustee website starts with GROSS income.

If your GROSS income is below the amount on the chart, then you are done with the Means Test, you can file Chapter 7, and it is simple.

But, if you fail the test by making too much GROSS income, then you have to fill out the long form and plug in taxes, health insurance, etc., to get to your bring home income, plus the test then accounts for other expenses you should have based on your family size and county and state of residence.

Note that social security does NOT count toward this gross amount, but virtually all other income does (wages, rent you get from renting something out to someone else, business profit (income minus expenses excluding taxes), child support, etc). In my State, the court determined that unemployment also does NOT count, but this may have been interpreted differently in your State.

Also, the period the income is looked at if the preceding full 6 months before you file the bankruptcy. So, say you file in November 2009. The 6 month period that the Court looks at is then May 1, 2009 to Ocotber 31, 2009. The Court adds up all gross income in that period, then doubles the amount to see if you qualify for Chapter 7.

So, after your wife's surgery might be a good time to file not only to include new bills, but also because she will miss work and this may reduce your preceding 6 month average and help you get a lower payment in your Chapter 13 (or even qualify for Chapter 7 if she is off work a long time).

Joe

LEGAL NOTICE: I am only licensed to practice law in certain state(s) and I cannot give legal advice to someone who does not reside in a state in which I am licensed, nor shall anything I say in the above answer or elsewhere on this site be deemed legal advice, even to someone who resides in a state in which I am licensed. Fees I receive for answering questions are paid for information, not for legal advice. This forum is designed to provide general information only, and information herein is not warranted to be correct or applicable in any way since laws may have been misinterpreted herein, since laws change from time to time, and since the impact of those laws on any particular situation varies. The information presented in this site shall not be construed to be formal legal advice nor the formation of an attorney-client relationship. Persons accessing this response are encouraged to seek independent legal counsel in their jurisdiction for guidance regarding their individual circumstances. Do not take any action or inaction based on information presented herein since it is informational and may not be accurate or applicable to you; it merely attempts to give you a basis of knowledge to help you formulate questions to ask a legal or other professional in a face-to-face meeting in your jurisdiction. Joseph Ross does not hold himself out to be a specialist or expert in any area, regardless of assertions made by any third party, and any implication of being an expert or specialist herein is made in error. I hope the information presented above is useful to you. Answer above is (c) Joseph Ross. All rights reserved.
JoeLawyer, Attorney
Category: Bankruptcy Law
Satisfied Customers: 767
Experience: Attorney in the practice of Bankruptcy Law since 1996
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