High DMI for chapter 13

[Tyler19]

Hello,

I just did the bk means test online and my results are:

Based on the information you have entered so far, you pass the means test requirements to qualify for Chapter 7 bankruptcy, because your monthly income of $3,894 is below the median income for 2-person households in Michigan ($4,369).

Summary of your data:

Your average monthly income is $3,894 and, so far, you have expense deductions totaling $ 3,078 per month. That would leave you with $ 816 at the end of each month to pay into a hypothetical, five-year Chapter 13 bankruptcy plan, which would pay your unsecured creditors $ 48,945 over the next five years, or 245 cents for each dollar of the $20,000 you owe them.


I would do a chapter 7 but we are 5 months behind on our house and want to keep it. So if I did a chapter 13, I am going to have to pay more than I owe them?

[keepinitreal]

No, you won't pay the creditors more than you owe them. After you pay your attorney fees, trustee fees, make up your 5 month's mortgage payments and pay off your other creditors, you'll no longer have to make monthly payments, even if you haven't made 36 or 60 payments.

[SMinGA]

First of all - if you are below the state's median income (which it seems you are) then you'd qualify for a 36 month plan assuming you can afford a payment enough to pay off your priority debts.

If $816 per month really is your DMI for 13 payment (may need to make sure your budget covers everything) then you'd probably pay $816 x 36 = $29,376 total. Your trustee would keep 5-10% of that (trustee fees vary by region) so assume worst case scenario of $26,438 for debts. Your attorney may allow you to pay part of his/her fee upfront and part in the plan. So that $26,438 would need to be enough to cover your mortgage arrears & atty fees and any other priority debts. After that, unsecured creditors would get some $.

If you were in a plan to pay 100% to unsecured, then it would end once they were paid. You would not keep going to pay them extra.

[Tyler19]

my past due mortgage is only $6000.
My unsecured debts are about $23,000

Since 36 months at $800 is $28800

Does that mean I would have to pay my unsecured debts in full since I have the money to do so? or would I not have to pay my full DMI?

[becky20]

The means test is different from the schedule J, which is what is used to determine your payment. You need to talk to an attorney to see what your true payment would be - did you look at all the allowed expenses and use those as a guide to make sure you didn't forget anything?