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Ellen, Attorney
Category: Bankruptcy Law
Satisfied Customers: 36714
Experience:  Bankruptcy Lawyer. Experienced.
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We are about to file a chapter 13 bankruptcy. My husband has

Customer Question

We are about to file a chapter 13 bankruptcy. My husband has a job with steady income as do I. Upon looking at our finances we have realized that I "pay" to go to work. After paying for gas (45 mile commute each way) and child care I bring in about $100 per month. This has me terribly down as I would like nothing more to be at home with our children. Can we finish filing--this should be done this week--and then may I quit my job? If I do quit it will make it a little difficult to pay the trustee as my husband will have insurance coming out of his check at that point. We have waited to file for 5 months now to get the money together for the attorney, so I believe our creditors are just about out of patience. I have been in contact with all of them up to this point, but I am concerned that they won't wait any longer. What should we do?
Submitted: 7 years ago.
Category: Bankruptcy Law
Expert:  Ellen replied 7 years ago.

I am the JustAnswer expert that will be helping you today. I am a lawyer with 25 years experience. Although I am not your attorney, I hope that I can give you helpful legal information.

You may want to consider a chapter 7 bankruptcy instead of a chapter 13 bankruptcy. I will explain.

As an individual, there are two types of bankruptcy available. A Chapter 7 and a Chapter 13. There are distinct differences in between a Chapter 7 and a Chapter 13 bankruptcy.

A Chapter 7 bankruptcy could discharge (erase) all of your unsecured debt such as credit cards, judgments and personal loans. It would be an opportunity for a fresh financial start. However, you may have to surrender assets, if any, that exceed your exemption.

A Chapter 13 bankruptcy is a repayment plan for an individual. It may require that you repay some of your unsecured credit card debt over a 3 -5 year period. However, you may retain assets that exceed your exemption.

Here are the exemptions for Iowa:

Best wishes for a successful outcome. If you have additional questions, please do not hesitate to submit them to me directly.

Thank you,
Customer: replied 7 years ago.
We are not eligible for a chapter 7. I don't completely understand why, but we are entering into a chapter 13.
Expert:  Ellen replied 7 years ago.
The reason most people are not eligible for a chapter 7, is because their income is too high. However since you will no longer be working, you may now qualify for the chapter 7. If you tell me your husband's annual income and the amount of people in your household, I will check to see if you qualify.
Customer: replied 7 years ago.
My husband made 57000 last year and I made 17600. We have four people in our household, ourselves and two children. I believe we will qualify for a 7 if I quit. That is my question though. We have signed all the papers for the 13. It took us many months to get the money together to pay the attorney so our creditors are about out of patience. Could we hold off long enough....I would have to turn in 2 weeks notice to my employer and then it will be two more weeks before my income is gone. How long would we have to wait to file then as the chapter is determined by the last 6 months of income? Or, if we go ahead and file, will we be in trouble if I quit then?
Expert:  Ellen replied 7 years ago.
You may qualify for a chapter 7 even with your income.

Here is why.

In order to file a chapter 7 bankruptcy, you must pass a means test that compares your family income with the median income of the family of the same size in your state. If you are at or below the median income, you pass the means test in are eligible to file a chapter 7 bankruptcy. If you are above the median income, you must pass an additional test which compares your disposable income and unsecured debts.

The median income in Iowa for a family of 4 is $72,701.