Should we file Married or Seperated??

[LostinMI]

What is the name of your state? MI

I just talked with a lawyer.... and she suggested that we file "physically" seperated instead of a married couple because of the income limit for filing a chapter 7 bankruptcy (we both work). I explained to her that we cannot afford to be physically seperated right now because of our debt, she suggested just using a "grandparents" address. Right now we are planning to divorce (after our financial mess is cleared up)... but I am not sure when that would be. Any advice?

 

[Ladynred]

There are no 'income limits' for filing bankruptcy right now. There won't be any with the new law either, BUT if your income is above your state's median income you won't be allowed to file Ch 7, you'll have to go for Ch 13 if you want any bankruptcy protection at all. Talk to another lawyer or 2.

There is no requirement that you file jointly just because you live in the same house. However, household income would likely be a factor on both yours and his petitions.

 

[LostinMI]

Thanks for the info. I think I will call another lawyer and ask the same questions to see if I get the same answers. I just worry that if we claim to be physically seperated (which we aren't currently but plan to after our financial mess is cleared up) when we aren't and the court finds out -- won't that be reason to throw out the bankruptcy entirely?

 

[Ladynred]

It really doesn't matter, the BK court isn't concerned about your marital status, they're looking at your FINANCIAL status. If you both file separately, then, if asked why by the Trustee, you can simply tell the Trustee you are filing for divorce once the bankruptcy is over.

 

[LostinMI]

Thanks LadynRed!! I was just concerned about "lying" about one of your addresses and having our case(s) dismissed because of that. So, we should both use our current address? Also, we want to reaffirm our mortgage and my car payment. Will they allow this if we file seperately? Do we both have to reaffirm or just me since I will be one keeping them?

 

[dumbpig]

Income is the issue isn't it? Apart your disposable income will be greatly reduced allowing you to file but togother it is probably an issue. I have similar situation with the wife leaving me recently and not enought time to divorce before the new law. All debt is in my name but technically we are still togother as not divorced. The lawyer said we can count my income only since we are seperated. Togother we can get by but apart we are done.gambling got me here.

 

[LostinMI]

I guess my real question is.... can we file seperately and still use the same address? The real isssue is the disposable income -- the difference in it once we are seperated.

 

[LostinMI]

One more questions.... If we do file seperately, can we both claim the exemption for our home? Or would that depend on if we used the same address (our home address)? By one of us using a "grandparents" address, would that exclude the home exemption?

 

[bigun]

This is getting more and more sticky.
Are you sure there is no way you could get a Chapter 7 discharged filing joint?
Are you still current on your unsecured debt?

 

[LostinMI]

No, I am not sure that we couldn't qualify for a chapter 7 jointly. I just don't know. I have the financial questionaire that the lawyer sent me.... but I am unsure on the household budget information and what is allowable and not allowable. When I spoke with the attorney over the phone last week, she said that it sounded like our income was too high to qualify for chapter 7.

 

[LostinMI]

I forgot to answer your 2nd question....
Some of the unsecure debt is current, other is a month or so behind. But nothing drastic (at this point). But we are barely making it and have just dug deeper & deeper to try to get out the hole we are in.... and we want to seperate and there is no way either of us can afford to do that now.

 

[bigun]

You and your husband need to sit down and fill out that questionaire and see what sort of disposable income you are showing. Here's another one that may help.Plus, go through your check register looking for other expenses not shown on the spreadsheets.

http://www.ca-bankruptcy-attorneys.com/calculators/expense_calculator.html

Don't include monthly payments for debt you wish to discharge.
Use reasonable and customary expenses for things like food and medical care. What you'd normally spend were money not an issue.
Sounds like you really ought to talk with another couple of lawyers.

 

[LostinMI]

Bigun -- are all the things listed on that form considered into expenses before determining disposable income? Also, I am not sure what to put for things like vehicle repair? Do I just guess?? Thanks for all of your help!

 

[bigun]

Yeah, they are. Some districts may treat them a little differently as to what they consider reasonable.
At a minimum, budget 4 oil changes a year, rotate the tires twice a year. In cold weather states like Mi. antifreeze and radiator checks prior to winter are necessary. If you know of some specific repairs that are needed, list those.

 

[LostinMI]

Bigun you have been a tremendous help!!
According to that calculator -- our living expenses surpass our net income (not by too much). But I am not sure if I am overestimating things like home maintenance, clothing, presents for holiday.... I wish there was a general rue $$$ amount -- At what point would the Trustee think the expense was too excessive?