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socrateaser
socrateaser, Attorney
Category: Bankruptcy Law
Satisfied Customers: 37960
Experience:  Attorney and Real Estate Broker -- Retired (mostly)
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I am considering bankruptcy in the next 6 months. My situation

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I am considering bankruptcy in the next 6 months.

My situation is as follow:
House under water by $135,000 that is now in foreclosure--redemption ends on 8/7/2013. I couldn't get it refinanced and prior to the foreclosure I would not have qualified for a short sale.
Owe the IRS $18,000 (the tax debt is from 2009 and 2010)
I have about $45,000 in credit card debt and $26,000 on a car loan that is worth about $16,000 with an interest rate of 1.9%.
I just got a divorce (most of the debt belongs to my husband but since everything was in my name then it essentially is mine to own). But my ex won't and probably can't help me financially.

Today I earn about $48,000 (which is close to the average for qualiifying for chapter 7).

My question is I just took the first course required by law and I did the budget analysis portion. The budget is stating that my rent on my new apartment should be $834.00 but I planned on renting an apartment for $1,250 and adjusting my budget in other areas. Such as not having a car payment, riding my bike to work for the first half of the semester, limiting eating out and recreation. Does my rent payment have to fit within the 30% guidelines? Would the bankruptcy court make me break my lease and get an apartment that fits the guidelines? Can you please advise?
Hello,

The bankruptcy court will not force you to break a lease. Qualifying for a Chapter 7 means satisfying the "means test." If you satisfy the test, you qualify.

If you were contemplating a Chapter 13, the court would still not require you to break an existing lease. The expense allocations provided by the U.S. Bankruptcy Trustee Program are the amounts that the court allows for expenses during the term of the bankruptcy plan. You don't have to follow them precisely, as long as your total expenses don't exceed the total permitted expenses -- because if the expenses are too great, then the plan will not be approved as you will not be paying enough to your creditors over the course of the plan.

If you would like to see if you qualify for Chapter 7, then here is a means test calculator with which you can make the determination.

Please let me know if I can be of further assistance.
Hello again,

I see that you have reviewed my answer, but that you have not provided a rating. Do you need any further clarification concerning my answer, or is everything satisfactory?
Customer: replied 3 years ago.

Ok so let me make sure I understand.


 


If I rent this apartment, and the cost is $1,250 plus utilities.


 


If I get accepted for Chapter 7----then they won't have an issue with my rent payment.


 


If I get accepted for Chapter 13---then it just has to fit my budget.


 


Is that correct?


 

Assuming that you have passed the means test, then you are correct.

Hope this helps.
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