Hello: This is PhillipsEsq. I am a licensed Attorney and I will be assisting you today.
Hi- My name isXXXXX separated from my husband (2nd marriage) about a month ago. I want to file bankruptcy for debt incurred prior to 2nd marriage that only my name is XXXXX XXXXX live in CA but have 1 single family home in NH that I haven't paid on since 2011 , interest rate of 12% or a monthly payment $4300/mo which, isn't in foreclosure. I bought it for $410,000 and it is worth today on Zillow for $350000. I applied multiple times for a loan modification all to no avail. I have only paid the $150 gas/$150 elec/$150 cable/ $80 mowing and $160 cleaning of that home. I also own a 3 family that I am current on and pay $2626/mo plus insurance $200/mo and hot water heater $25/mo. I bought it for $279000 , owe $259000 and Zillow lists it for $190000. I also owe back IRS taxes 2008, 2009, 2010 totaling $16000 and 2012 for $12000. I can't maintain property that far away plus I can't afford the single family home payment at all so, I just want a clean start. I also have a loan that covered closing costs on my single family home that is now listed as bad debt on my credit report for $12000. I pay medical/dental/term life and vision per month of $542.00 I want to keep my car $535/mo and insurance $200/mo. I also have a a student loan from 1996 when I graduated from a Master of Science program which is $8000, I pay $100.00 month. My rent is $2000 a month and elec 100/mo. I didn't work March April but started new job 5/21 this year and I was told by a friend that the last 6 months of income would be used to qualify me for bankruptcy. I would like to file ch 7. My current pay is $50.48 /hr but my ytd salary 5/21 through the end of Sept is $36966 or $6100 per month. My take home net pay is $2722/check paid every two weeks.My gross salary is $4044/check. My questions are (1) can I file chapter 7 or would I be forced to file chapter 13? CH 13 won't help as I can't afford to pay all the debt over a term of xx years, it wouldn't give me a clean start.
Response 1: You would be eligible to file for Chapter 7 bankruptcy protection, if you meet the Means test—the income test. If your income is equal to or less than the current income guidelines for your family size in your state, you would be eligible to file for a Chapter 7 bankruptcy all things being equal. The income used in calculating the Means test is the income for the 6 months before the filing of the bankruptcy petition. This means that if you are filing for bankruptcy protection this month, September 2013, the income that would be used is your income from March 2013 to August 2013. If you are filing next month, October 2013, the income that would be used in the Means Test calculation would be the income from April 2013 to September 2013, etc. So, since you started working in May, the sooner you file the better. The longer you wait, the risk that your income would exceed the maximum income for your family size.
Also, because you are still married and NOT legally separated, your husband's income would also be used in calculating the Means Test.
These are current income guidelines for the State of California:
Family size of one person $48,415.00
Family size of two persons $63,030.00
Family size of three persons $67,401.00
Family size of four persons $75,656.00
Add $8,100.00 for additional individual
The filling fee for Chapter 7 is $306.00. You may able to waive this filing fee if your income is 150% below the current poverty guidelines. Click here for current poverty guidelines:
You must receive budget and credit counseling from an approved credit counseling agency and obtain a Certificate of Credit Counselling to be filed with your bankruptcy case. The agency will review possible options available to you in credit counseling and assist you in reviewing your budget. Different agencies provide the counseling in-person, by telephone, or over the Internet.
It is usually a good idea for you to meet with an attorney before you receive the required credit counseling. Unlike a credit counselor, who cannot give legal advice, an attorney can provide counseling on whether bankruptcy is the best option. If bankruptcy is not the right answer for you, a good attorney will offer a range of other suggestions. The attorney can also provide you with a list of approved credit counseling agencies, or you can check the website for the United States Trustee Program office at http://www.usdoj.gov/ust/eo/bapcpa/ccde/cc_approved.htm
After your case is filed, you must complete an approved course in personal finances. This course will take approximately two hours to complete. Your attorney can give you a list of organizations that provide approved courses, or you can check the website for the United States Trustee Program office at http://www.usdoj.gov/ust/eo/bapcpa/ccde/de_approved.htm
Consult a local bankruptcy attorney for further explanations of your rights and responsibilities.
The sites below are good resources for finding bankruptcy attorneys in your area:
If you cannot afford an Attorney, then the next best alternative will be to use bankruptcy petition preparer. Bankruptcy petition preparers prepare bankruptcy forms but they cannot give you legal advice because they are not attorneys. Click on the links below for some of the bankruptcy petition preparers. You can do some searches on Google or Yahoo if you do not like the ones on the links below.
(2) Do I need to legally separate or divorce or is our written agreement to separate fine?
My spouse moved out and is staying with a friend and I now am taking over the rent and utilities.
Response 2: No, it is not fine. You have to legally separate or divorce your husband in order for his income not to be used in calculating the Means Test. So, if you are not legally separated or divorced, your Means Test would be family size of two if you do not have any other dependents. If your husband is working, then you may not meet the Means Test to qualify for Chapter 7.
I agree with you, Chapter 13 is not the way to go. It has very high failure rate for obvious reason. You cannot forecast the future. You can lose your job again or something can occur down the road making it impossible for you to make your payment under the Chapter 13 plan.
(3) How fast does bankruptcy happen if I went to a lawyer next week with all my documents and started the process?
Response 3: I do not know about other Attorneys, but I have filed bankruptcy petitions for clients within 48 hours of receiving ALL documents from them.
Lastly, (4) can you recommend a lawyer in the San Marcos or San Diego CA area and what would the average cost I could expect to pay for this service.
Response 4: I cannot make personal referrals. However, I have provided you with links to web sites you can use to find bankruptcy Attorneys.
As for fees, the maximum fees are set by local bankruptcy Courts. Bankruptcy Attorneys charge different fees depending on the services provided. However, you should expect to pay between $1,500.00 to $2,500.00. For more information on fees click here