Chapter 13 question about disp income

[cjsgac]

I just filled out the 22C form to figure my disposable income. Our income is too high for a chapter 7 so we are going to file a chapter 13. Our averaged 6 month gross income is $11676 and I calculated our disposable income to be $3137/ month which is really too high. Last year with $2300/month in cc/2nd mortgage payments we still overspent by $2000 a month. Obviously I know we need to cut back and live on a budget but our actual net income every month is only $7174. Does the court base it on gross income for the last 6 months or will it take into account our net income? Thanks!

[forgotten]

I just filled out the 22C form to figure my disposable income. Our income is too high for a chapter 7 so we are going to file a chapter 13. Our averaged 6 month gross income is $11676 and I calculated our disposable income to be $3137/ month which is really too high. Last year with $2300/month in cc/2nd mortgage payments we still overspent by $2000 a month. Obviously I know we need to cut back and live on a budget but our actual net income every month is only $7174. Does the court base it on gross income for the last 6 months or will it take into account our net income? Thanks!

There are deductions from your income on the form for taxes and insurance.
30. taxes
32. life insurance
39. health insurance
and so on....

Better go over the form again.

[kornellred]

So you are saying that you take home $11,676 per month? (that's after taxes). That would mean you earn well over $200,000 per year. Your disposable income is what is left over after you have paid all of your living expenses - that does not include what you pay to your creditors. There are maximum amounts applicable to your living expenses depending upon the state that you live in. For instance, if your mortgage payment is $3000 per month and the IRS tables allow for only $2500 per month, that is all you will be allowed to claim on the various schedules. Your calculated net disposable income will be based upon maximum allowances if you exceed them.

Then your attorney looks for loopholes, exceptions, exemptions, and applies every arcane formula appropriate to your situation and comes up with a number.

I cannot imagine that high-income earners will be anywhere near satisfied with the results in any case.

[cjsgac]

No, $11676 is my Gross income per month for the past 6 months. My current Net income per month now is $7174, that's after my husband took a big pay cut. My question is will my trustee payment be a lot lower than the min pymt now ($2300/month for 2nd mtg and cc's)?

[momofthree]

The means test actually uses your net income because it allows you to type in the deduction amounts from your paycheck (fed/state taxes, FICA, medical insurance, retirement, etc). So, to answer your question, yes, they will go off of your net income.

I'm wondering if maybe you didn't fully complete the means test properly.

Here's one that's pretty easy to use as it auto-fills all the IRS standards for you. Just type in your zip code at the top (and press "change zip") and your family size and it auto fills. Then you just have to add in your income & allowable debts (normally your car & mortgage) and your paycheck withholdings.

http://www.legalconsumer.com/bankruptcy/bankruptcy-means-test.php?ZIP=61349&CITY=Ohio&ST=IL&FEDCT=ILC&FIPS=17011&LOC=2411&LOCNAME=Bureau&SUB=3434&SUBNAME=Ottawa-Streator&REG=3270&REGNAME=Northwest+Illinois&CBSA=36860&METRO=Ottawa-Streator

Also, keep in mind, there are other allowable expenses when coming up with a ch. 13 repayment plan that are not included on the means test. Things like entertainment, cell phone, etc.

[cjsgac]

Hi Mom of Three-

Thanks for your reply...I am sure I didnt complete the test properly. I will definitely use that calculator you sent, thanks for that. So, since it looks like you are waiting to have your 341 meeting, what does 0% payback mean? How long has it taken you to file from the time you decided you were going to? I hope you don't mind all these questions....we are just new to all of this and are starting to feel anxious as we have our 2 hour meeting with our attorney next week.

Thanks!

[sofarsogood2]

Have you interviewed more than 1 attorney? It's best to get a few consults. We did 4 and the last one came up with the best strategy for us. Worked out really well. The advice of the first three would have put us in a very bad situation for 5 years.
Also, for the most part, payments are based on your past six months earnings. If the pay cut to hubby is recent, you may need to delay filing.
Best Wishes!