Chapter 13 Help?

[AllAboutTheDebt]

Hi, 

I am a RI Resident deep in debt. All in my wife and I have $60K in CC and $107K in unsecured personal loans for $167K in total, with payments of $4,490 monthly. In terms of income I make $80K (+$2-3K in bonus) she makes $48K, but has a $50K 401K loan that reduces her take home by $300 per biweekly check or $7,800 reduced yearly. We have two children 5 and under. I am trying to convince my wife to come onboard with bankruptcy as the stress is too much, all in we are paying $10.4K against $7.5K in income. I’m assuming with our combined income we would not qualify for Chapter 7 based on the means test RI has a maximum income of $114,580 for a family of 4 and we exceed that by $14K but I have no inkling as to how much the monthly payments to my unsecured debts could drop, that might be the key to convincing her this is absolutely necessary. We are current on all bills. 

Other expenses monthly ~$6136

• Mortgage is $2730
• Day Care is $900
• Groceries $500
• Car Payment $450 (we have 2 but own one w/o a loan)
• Fuel Costs $500 (I travel 20-25K miles per year)
• Car Insurance $220
• House utilities: $300 (Gas, oil, water, sewage, electricity)
• Cell Phones $171 (looking to switch)
• Student Loans $125
• Cloths and Diapers $125
• Cable Internet: $75
• Web Services: $40 (Netflix, Hulu, Nytimes)   
• Furniture: $62 ($4K balance 0% interest for life)

Any help/knowledge is appreciated or links to past discussions I missed in my searches. 

[FireMedic1]

Welcome @AllAboutTheDebt 

With all thats going on. Legal advise is the best. Many lawyers give free consults. Off hand. Is there a way to take a pay cut, cut OT, or any other way to drop income below that 14 k mark. I had to stop working OT and quit my 2nd job for 6 months to make it under the radar. Worked out fine. Once filed and had the MOC's. Right back to work. You lawyer may ask the same thing. So its fresh start or pay for yrs when you get down to it. Keep us updated please.

[Laredo]

My Ch13 was just discharged in July after Completing 60 months and can easily say I was in a similar situation as you.  The stress was killing me and I had no choice but to seek legal advise.  My wife did not file because just about everything was in my name.  We did not qualify for the Ch7 due to our combined income.  Every situation is different and as FireMedic1 stated legal advise would be best.  You may feel better after the legal discussion as options may be placed on the table.  I know I did afterwards.  I can tell you now the stress will not end.  Keep us posted.

[AllAboutTheDebt]

Appreciate the response, it did occur to me if my wife left her role (difficult to reduce her hours) and we delayed filing for 4-5 months we would qualify for Chapter 7. My only concern in doing that was if we were questioned on it I wouldn't have a solid explanation outside of her being burned out and wanting to spend more time with the kids.

Appreciate the response!

[FLLGuy]

@AllAboutTheDebt  - when i first filed BK 13, my wife and I were forced (no options to negotiate 5yr based on our total household income and that stupid means test) to take the 3yr plan paying nearly $2300/Mo.  I paid it the first few months and then my wife's company " (wink) (wink) restructured, a prettier word for "lay off".  Called my attorney and immediately remodified our plan and now we qualified for a 5yr plan paying $1,800 less.   HOwever, we did have to provide an explanation to our trustee and I will say my attorney highly emphasized mental impact is a legit reason to resign from a position.  Not sure if this is helpful for you but not all trustees are the same each region and state operate differently.    In summary, Yes, if your spouse can no longer contribute to the overall household income then you may qualify for a reduced rate maybe even Chapter 7.  

One last point to make on this subject - when i was laid off 1.5yr after initially filing I too was laid off and would've qualified for conversion from Chapter 13 to 7.  Unfortunately, because my company let me go with sizable severance package I did not qualify and resumed business and payments as usual.  However, she did say that if severance runs out and I can't secure a job making the same salary then i have a chance to convert to Chapter 7.    Apologize for the extra sausage making details and explanation here or "arroz con mango" as we say in SoFlo.  \ 

[Brucemac]

Like the others have posted, the stress will not end.  I was in a very similar situation you are.  In August I had my 3 year anniversary of my 5 year plan.  Depending on your situation and your combined income, it's not an easy road, but there is light at the end of the tunnel.  I am now at the highest point of my plan which is $1410 a month.  It hurts, but I can sleep at night without worrying about AmEx or others suing me (AmEx did file which was the tipping point for me).  We have cut back on all unnecessary expeses. Rarely do we eat out anymore and we haven't had a vacation in the 3 years.  But I'm able to pay all my monthly expenses and plan payments and can sleep at night and not afraid to answer the phone! The day you file you will receive an automatic stay and creditors can no longer contact you.  A few may at first but just refer them to your attorney and they will handle it.  Most just want the case number and then they stop.  Good luck and do keep us posted.