BK Chapter 7 Declined

[azfitz11]

Ok group! Help me out. I had a consultation today with a BK Attorney. He tells me, according to the State of Florida Means test, I do not qualify to file bankruptcy. Says I make too much money, in fact roughly $600 too much. I have averaged roughly $90,000 a year the past 3 years. I am paid salary plus commission. He said the issue is how much I have made in the last 4 months in commission. Which is not normal, the commission has been high due to i'm short handed and running more calls than I normally would being the Service Manager. According to him, because I am on track to make $106,000 in a years span and have a household of only 4 I do not qualify. He said if I had 7 dependants in home I would qualify. How in depth are they at verifing the amount of dependants in home? LOL, Joking, kinda sort of. 

This means test seemed to be done without him having all the information. He didn't ask about the $30,000 in loans, the $957 monthly garnishment, and other debt. Is that normal or did this guy not want to help? I am looking to talk to another Attorney, but don't have my hopes up. Any suggestions on who to call in Orlando? Sorry if i'm not suppose to ask for referrals.

If BK is not an option, is it worth the time to contact my credit card companies and personal loans to ask for an interest rate deduction? 

My personal loans are from NFCU and Penfed. I can get into more detail about the debt if need be. 

Any suggestions would be appreciated.

[Anonymous]

Did he discuss ch13 as an option? 

[despritfreya]

What you averaged as income over the past few years is not relevant.  What you earned last year is not relevant.  The fact that your wages are being garnished is not relevant.

What is relevant is your GROSS earnings in the 6 month window prior to filing bk.  If your bonuses over the past 4 months have been extraordinary then maybe wait until those months fall off the 6 month radar to see how low you can get for "current monthly income" (the 6 month average).

Median annual income for a family of 4 in Fl is $72,598.00. This translates to $6,079.83 per month.  If your average monthly GROSS earnings (including bonuses) within the 6 full months prior to filing is above $6,079.83/mo you are above median income and must complete the means test.  The actual test is based upon IRS local and national standards plus consideration for secured debt and some other items.  If, after completing the means test, you have sufficient income to pay your creditors something more than just a token monthly payment you will not qualify for a Chapter 7. 

Google "free means test calculator" and play with the numbers.

Des.

[Anonymous]

In addition to what despritfreya wrote, I'd also consult with more than one attorney. The first attorney I met with immediately said Chapter 13 was my only option, also because my income was above the median. I felt pushed into a CH13 plan. After discussing the means test with another attorney, and explaining my costs (that I could support with bank statements), the second attorney said CH7 would not be a problem. And it wasn't. 

The point here? Do the means test yourself; be prepared to explain it to another attorney; and work with one that you feel comfortable with. Maybe you do qualify. Maybe you don't. But it's ultimately your bankruptcy. 

[Anonymous]

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@Anonymouswrote:

In addition to what despritfreya wrote, I'd also consult with more than one attorney. The first attorney I met with immediately said Chapter 13 was my only option, also because my income was above the median. I felt pushed into a CH13 plan. After discussing the means test with another attorney, and explaining my costs (that I could support with bank statements), the second attorney said CH7 would not be a problem. And it wasn't. 

The point here? Do the means test yourself; be prepared to explain it to another attorney; and work with one that you feel comfortable with. Maybe you do qualify. Maybe you don't. But it's ultimately your bankruptcy. 

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^This is exactly what happened to me.

Talk to more attorneys and if you're still borderline, find the sweet spot for your 6 months prior earnings.

In my case, my attorney ended up costing 3x that of a basic CH7 attorney. A lot of the $1000 CH7 attorneys operate like factories wanting to churn the simple cases out with no complications whatsoever. Sometimes spending more gets you more specialized attention and attention to detail that can make it all work.

[Anonymous]

I wish I had known that 7 years ago. I was told by my attorney initially that a CH7 was a slam dunk. Then, right after I filed, they called me to say that new income limits put me just over the top by about $1200 and they converted me to a CH13 (without my permission).

Had I been able to stay with CH7 my life would have been much easier over the next 7 years. Only now am I finally catching up.

[missy42]

I feel your pain.  I'm a retired/disabled veteran and stopped working Oct 2016 due to health reasons.  Was told I qualified for ch7 and could include the house.  Fast forward to Jun 2017 I find out I don't pass the means test and never would as I am single/no kids and in the state of FL because there are 1.9 million military retirees they count my VA disability check as income.  Ended up filing a Ch 13 which was confirmed on 2/14/2018.  So for the next 5 years I'm on this horrid repayment plan but at least I get to keep my home.  It's hard adjusting to everything but I just keep plugging along as I realize I didn't have the best law office but I'm resigned to the fact that "this too shall pass". Whatever you decide know that a ch7 is always easier than a ch13.  I would love to have my retirement and VA disability checks to myself which a chap 7 would have afforded me but my end game will be great.  No debt, mortgage paid down, and hopefully in 2022 I'll be able to travel like I want too.  

Some told me to find another lawyer and push for the ch7.  I decided to stick it out and while I often wonder if I made the right decision (ch13 payments are high and hard) I still think in the end keeping my VA home was a better outcome even if it's 4.5 years away!  Best of luck to you whichever way you choose I agree with previous responses it's your choice.