Disposable Income

[wm7888]

I'm filing next Fri and I have my budget worked out with about $400 Disposable income.What are the chances that the creditors will not settle for this because if my payments are much more than this I would not be able to pay it.I mean I could cut groceries and maybe medical and be able to afford $600 but really nothing more.

[mmenz22779]

you want disposable income to 0.

increase your taxes or take out a term life insurance policy, then wait for a little bit then file.

[magyar123]

I'm filing next Fri and I have my budget worked out with about $400 Disposable income.What are the chances that the creditors will not settle for this because if my payments are much more than this I would not be able to pay it.I mean I could cut groceries and maybe medical and be able to afford $600 but really nothing more.

It's the trustee/court who determine how to divi up your disposable income among him/herself and the creditors - AND NOT the creditors.

[liz417]

Like magyar123 said, it doesn't matter if your creditors don't like your repayment amount...it's up to your trustee. Also, make sure you've included EVERYTHING in your expenses that you wouldn't normally pay out monthly, i.e., glasses, contact lenses, subscriptions, work/union dues, auto tow package, etc. Try to get your disposable $$ down to zero, it's better to work up from $0 THAN to start at $400 and go up

Good Luck!

[wm7888]

What a great website thanks for all your help!! I cant wait to get my life back on the right foot.

Don

[mmenz22779]

it is farily easy to get your DI down to 0,

anouther easy way if you have a 401k take out a loan and keep the payments high. You can also start a small contribution to a 401k.

the loan payment will count against your DI, same thing with 401k contributions.

But you just cant do these things and file next week. You have to give your self some time. a couple of months at least.

The term life insurance is super easy. Take the policy that has no medical check and has a high payment. you can easily spend 150+ a month on a policy. Remember you can always "cancel your policy later on if you are not happy with it.

With a little more pre planning I bet you can get your DI down lower than 400.

[liz417]

it is farily easy to get your DI down to 0,

The term life insurance is super easy. Take the policy that has no medical check and has a high payment. you can easily spend 150+ a month on a policy. Remember you can always "cancel your policy later on if you are not happy with it.

With a little more pre planning I bet you can get your DI down lower than 400.

Good Idea!!

[krielly]

Umm.......this is the Chapt 13 forum, so why is the OP being told to get their disposable income to "0"?

If the disposable income is "0", and the goal is a 13, the plan will not be confirmed..............

??????????????

[mmenz22779]

it can get confirmed, you get a 0 % payback and basiclly pay your trustee and laywer.

there have been cases of this.

othewise you may be forced into a 7 but still get to keep the things you wanted to in a 13.

If i am not mistaken the judge can modify the 13 any way he wishes.

but the point is maybe not get the income to 0 but get it lower that 400.

[liz417]

When you turn in the expense forms to your attorney, they will work with the numbers, some of the expenses will not be allowed (or adjusted) by the attorney first, then the Trustee, therefore, increasing the monthly payment. Like I said, it's easier to work up from $0 than to start at $400. I was simply trying to point out that the OP may have "overlooked" some expenses too

[liz417]

P.S. We had a recent poster with a monthly payment of less than $100 on a 92k debt!!

[justbroke]

Umm.......this is the Chapt 13 forum, so why is the OP being told to get their disposable income to "0"?

If the disposable income is "0", and the goal is a 13, the plan will not be confirmed..............

??????????????

You can get a confirmed plan with a negative DMI. Just ask me how.

The disposable monthly income (DMI) is not what will keep you from confirming a plan. The DMI is just a number used to determine how much you may have to pay back to unsecured creditors... at a minimum.

When your DMI is negative, there's only one thing which overrides this. That is if you don't have enough exemptions to cover property, which means you have some non-exempt assets worth some money. Since a Chapter 13 plan must pay back unsecured creditors "at least as much as they would have received in a Chapter 7 liquidation", you would still have to make a minimum payment in order to provide that liquidation value to your creditors.

In my case, my liquidation value is negative as well. That means my creditors, in a Chapter 7, would get nothing. Therefore, I can have a negative DMI and pay unsecured creditors 0%.

[lrprn]

Wm7888, are you filing Ch 13 because you are behind on payments for an asset or assets you want to keep, or another reason that makes Ch 13 preferable to Ch 7? Also did the $400 disposable income figure you mentioned come from an experienced bk lawyer completing the Means Test and Schedules, or did you come up with that figure yourself?

[ekorB]

Can someone clarify...if you have a DMI of zero, how does the trustee and attorney get paid?

[lrprn]

Can someone clarify...if you have a DMI of zero, how does the trustee and attorney get paid?

If the Means Test and Schedules do show a disposable income of zero, then you can't file Ch 13.

What most bk lawyers will do for folks truly desperate to keep their home (or other asset, but usually it's a home) who have already filed Ch 7 within the last 8 years is 'tweak' the Means Test and Schedules numbers to produce just enough disposable income to support a Ch 13 plan. This is the only way the filer can keep their asset.

Frankly at this point looking at the situation in an unemotional, logical fashion, it's usually in the filer's best interest to let the asset go. But many people just can't do that. So they do whatever necessary to file Ch 13 so they protect the asset until eight years go by and they can file Ch 7 again. It's a very tricky thing to do that, unfortunately, often ends in the Ch 13 being dismissed because they truly do not have the disposable income to support the 'tweaked' plan.