How mad are you if you barely have too much income to file Chapter 7?

[JackBondLove]

I was wondering about this. A long time ago I had a regular job in which the income was just barely above the limit to get bond money financing for my home (and thereby get a reduction of 1.5% interest rate.) In essence, not being able to get that low interest loan was like a net implicit $1K/yr tax increase, so much so that had I had a salary exactly at the limit, I would have had more after tax, after mortgage income. I was quite angry that the situation was set up as such.

I figure that a lot of folks that have barely over the median income and are forced to do Chapter 13, when they could have gone Chapter 7 with a much, much higher net position feel the same way. It almost seems like it would be worth it for someone to take a lower paying job (or just go unemployed) just to be able to do the Chapter 7.

[Bkman2]

I was over the income limit by $169 a month. My DMI was at $277 a month but got lowered to $87 a month. Yes it does sometimes make me mad that I'm in a chapter 13 for 5 years but I'm here because of things I did. Per my attorney when/if my income drops and stays down below the limits I can convert to a chapter 7 and they will just do another 6 month look back. You just have to keep track of your bills and income. If the bills go up and the income goes down then you convert.

[justbroke]

How mad are you if you barely have too much income to file Chapter 7?

No one should be mad even if they are "significantly" over the median income. Even being under the medium doesn't guarantee you will get a dischage. The only thing being under the median income does, is precludes you from filling out more than just Section I of the Means Test (Form B22A/B22C). Being under the median also precludes you from the "presumption of abuse" as well.

However, neither being under the medium or over the medium protects you when your Schedule I and J show disposable monthly income. The plain fact is that it's your income and expenses that will get you your chapter 7 discharge. Being under-them-median allows cases to move through very easily without much fanfare or scrutiny. The reason you don't want to be over-the-median, is because it welcomes the United States Trustee (UST) to become "interested" and start to pick apart your numbers.

I was in a Chapter 13 by choice. I have since decided that I was in nothing more than a glorified Chapter 7 (with a DMI greater than $-400/month) so I decided to just finish it. I spent 20 months in my Chapter 13.

[olivies]

The reason you don't want to be over-the-median, is because it welcomes the United States Trustee (UST) to become "interested" and start to pick apart your numbers.

I was in a Chapter 13 by choice. I have since decided that I was in nothing more than a glorified Chapter 7 (with a DMI greater than $-400/month) so I decided to just finish it. I spent 20 months in my Chapter 13.

Hey JB, how does the conversion process work? Is there a new 341 involved? Do you have to resubmit paperwork and the last 6mos of paystubs, effectively like filing all over again? I am curious because we have an attorney looking at correcting our financials and seeing if it is possible to convert us to a 7.

[justbroke]

Hey JB, how does the conversion process work? Is there a new 341 involved?

There is a new 341 Meeting and new "dates" for dischargeability and filing claims. It's like it's a new case. However, if you were a prior Chapter 7, converted to Chapter 13, and are now converting back to Chapter 7, there is an exception to this rule. If your "original" Chapter 7 already had the 341 Meeting and all the original dates to file had passed before you converted to Chapter 13, then you don't need to go through those! However, you can't convert just by "notification". Your conversion would need to be "approved" by motion.

Do you have to resubmit paperwork and the last 6mos of paystubs, effectively like filing all over again?

This depends on your District and what you're trying to do. Some Districts don't even require a new means test, while others do. You would need to file a Statement of Intentions. Just go see your "local rules" on what needs to be filed. Usually the Conversion Order contains the specifics of what you "must" do.