DMI too high for amount of debt?

[kalena49]

Hi,I am new to this forum and am so glad I found you all! Just had initial consultation with attorney. After running our expenses,he came up with over 1300 a month disposable income. Our total unsecured debt is only about 28,000 -- assuming a 5 year payback ,that comes to way more than we owe! am I missing something?

[HHM]

It would mean your plan would be shorter. You do not pay back more than you owe in chapter 13.

Well, if you have DMI anywhere close to that amount and $28K in CC debt, and that is your only debt issue, you may want to look at Consumer Credit Counseling. However, there is nothing inherently wrong with a 100% payment plan. At least you get out of debt in 5 years or less, and you are in complete control of the situation. Credit cards are not required to participate in consumer credit counseling.

[sheilaE]

After the means test, our Atty figured out our payment at being $1300.00. Our cc debt is $80,000.00 with a $50,000.00 2nd to be stripped.

[Pandora]

After the means test, our Atty figured out our payment at being $1300.00. Our cc debt is $80,000.00 with a $50,000.00 2nd to be stripped.

OMG - is that with all your deductions? Thats astronomical! So you'd pay back a min of almost 47K on the min. plan of 36 months and upwards of 78K on a 60 month plan - holy crap!

Here I thought our 600 a month was high - and so does our attorney given we are below the means for income.

OUCH.

[sheilaE]

Well I've learned soooooo much since that 1st meeting with the atty. Thank goodness for this site!!! When we go back in to file-I will go in fighting to keep as much $$$ as possible. The sad part is--is that HE's the one who should be fighting for us. I shouldn't of had to learn about all the deductions we're entitled to on here-he should have told us. I hope we didn't make a mistake by retaining him.

[SMinGA]

Yes & No. Yes, I think the atty should fight for you & your reasonable expenses. But the atty is not a mindreader, and on the first consult he is not going to have worked with you enough to figure out that you have not put any time & effort into compiling an accurate list of your expenses. If you give your atty an incomplete list, the plan the atty builds is going to leave you short on $.

The sad part is--is that HE's the one who should be fighting for us. I shouldn't of had to learn about all the deductions we're entitled to on here-he should have told us. I hope we didn't make a mistake by retaining him.

[sheilaE]

That's true. When we went in to meet with him-we thought we were doing a 7. We had no idea we were going to give him a list of our expenses, so it was all off the top of our heads. I think we told him $500.00 on groceries/personal care items/cleaning products and boy were we wrong. Now that we've been keeping our receipts it's more like $1100.00 and he never mentioned anything about car tags (we have 3 due this summer) or car maintenance. If it weren't for this site and say we had filed that same day-we would have set ourselves up to fail. This site has really been a learning experience for us.

[Universal]

I wish we had been better prepared when we had our first atty. meeting as amounts offered up would have been much more accurate. With our inaccuracy, the payment was estimated to be $800 a month, which I was really glad about. With accurate figures, it was $1,240 a month, ouch.
But........ I didn't find this board until after beginning the process.

[Pandora]

That's true. When we went in to meet with him-we thought we were doing a 7. We had no idea we were going to give him a list of our expenses, so it was all off the top of our heads. I think we told him $500.00 on groceries/personal care items/cleaning products and boy were we wrong. Now that we've been keeping our receipts it's more like $1100.00 and he never mentioned anything about car tags (we have 3 due this summer) or car maintenance. If it weren't for this site and say we had filed that same day-we would have set ourselves up to fail. This site has really been a learning experience for us.

You should include EVERYTHING that you pay out for services for the entire year, broken down monthly into equal monthly installments (i.e., car insurance is 1900 a year / 12 = $158.33 a month, gas money $75 a week x 4 = $300 month gas) and so on and so forth. If you have AAA, the newspaper, hair cuts, copays for medications (both RX and OTC), doctors visits, tithing, car maintenance (oil changes and tire rotations arent free ;) ) vehicle inspection, tags, drivers license, etc - then all all those things in too. Dont forget birthdays, special occasions, Christmas... those are pretty big, and you are allowed to claim them within reason. I believe we claimed $50.00 a month for Christmas, $20 for birthdays, and even did $100 for savings - and the trustee (so far) has not objected to our plan. We were also allowed $60 a month for recreation "blow money" so we could go out and do something.

Just think about everything you spend money on, and then do up your budget. Your attorney should be assisting you, or you could look at Schedules I & J and fill a mock up on your own, it does have alot of things there already to get you started.

[SMinGA]

Be careful with your math... If you use this strategy for all your spending (groceries, gas, household & personal supplies, etc.) you're going to come up short every month. There are not 4 weeks in a month - except for February of course.

Lets say you spend $125/week on groceries, $75/week on gas, and $50/week combined on personal/household/etc. That's $250 a week - so by your logic, $1,000 a month or $12,000 a year. But there are actually 52 weeks in a year, so you need to budget $13,000 a year, or $1083/mo.

I know many get paid weekly or bi-weekly and assume 4 weeks to a month, but the trustee/court is going to calculate your average monthly income - so you need to be sure and accurately calculate your average monthly expenses.

You can probably make do with the shortage here & there, but after a while its going to hurt and you can't always rob from one category to pay another.

As to the 'savings' that will probably not reach confirmation unless you're already paying a large amount to unsecured, but then again it could vary by trustee/district.

gas money $75 a week x 4 = $300 month gas)
...
and even did $100 for savings - and the trustee (so far) has not objected to our plan.

[catleg]

Yeah and then after you do all that, the ch13 TT is going to slash all your expenses down to the IRS standard allowances. If you've above median, that is.

[MelCapp]

I don't understand all of the discussion about expenses, though I know you have to put it in your schedules. I thought what it comes down to is what you have as disposable income on your b22c. Is that wrong??

Our budget looks pretty different than the b22c, should our attorney (who is awful) be counseling us to build a more realistic budget and then use that??!!

[SMinGA]

The means test uses certain standards (based on IRS guidelines, county & state of residence, family size) to determine if there is a 'presumption of abuse' and help decide if someone can file a ch. 7 or must file ch. 13. Over/under median income also determine's whether you have the option of a 36 month plan.

My understanding (insert usual disclaimer about how I'm not an attorney here) is that your actual expenses on schedule J are the main factor in determining your plan payment. In most cases, your actual expenses will be lower in most areas than the means test figures. But then, some things don't rely on standards like 401k loan payments and such, and those things can be factored in.

Bottom line, as I see it, you do NOT want to sign a plan and allow your atty to file it if you are not confident that your necessary expenses are accounted for. You will need to live with that budget for 3-5 years, don't sign til its right. That does not mean you can spend whatever you want - but you can compare what you think you need to the IRS guidelines (from the means test) and if you're under then fight for it. If you're over but have good reason to be, then fight for that as well.

I don't understand all of the discussion about expenses, though I know you have to put it in your schedules. I thought what it comes down to is what you have as disposable income on your b22c. Is that wrong??

Our budget looks pretty different than the b22c, should our attorney (who is awful) be counseling us to build a more realistic budget and then use that??!!

[sheilaE]

Good advice as usual!

[Pandora]

Be careful with your math... If you use this strategy for all your spending (groceries, gas, household & personal supplies, etc.) you're going to come up short every month. There are not 4 weeks in a month - except for February of course.

Lets say you spend $125/week on groceries, $75/week on gas, and $50/week combined on personal/household/etc. That's $250 a week - so by your logic, $1,000 a month or $12,000 a year. But there are actually 52 weeks in a year, so you need to budget $13,000 a year, or $1083/mo.

I know many get paid weekly or bi-weekly and assume 4 weeks to a month, but the trustee/court is going to calculate your average monthly income - so you need to be sure and accurately calculate your average monthly expenses.

You can probably make do with the shortage here & there, but after a while its going to hurt and you can't always rob from one category to pay another.

As to the 'savings' that will probably not reach confirmation unless you're already paying a large amount to unsecured, but then again it could vary by trustee/district.

You're correct; my examples were just in general, but suit my situation - however many are paid weekly, bi-weekly, and or twice a month, resulting in 26 or 24 payperiods, like the military. That makes a huge difference in calculating your budget out - so - budget accordingly and to how your pay periods fall. Make sure if you're paid for 26 pay periods that you tell your lawyer that - ours assumed 24 and it changed our DMI by almost $100 dollars a month, until we told him nope..its 26, therefore less money monthly. (thank god we caught that error!)

For instance, our auto insurance is only for 9 months, but we still allocated it for 12, so that extra money just goes into the "ER" fund folder slot. We have things that are due quarterly that we averaged out to monthly, and set it all aside; same with gas. I take out and pay us every pay day first and foremost (after the trustee of course since it direct deposit to him), first thing I do is deduct $150 for gas for the 2 weeks and $250 for groceries. Everything else has a name to it and a bill or folder it goes into. ;) We've been doing this since March and so far have only had a few issues where I went over in groceries by $30 or so in one week (I budget $125 a week), but it evened out the following week and just took it away from that weeks budget).

Its hard, but it can be done

I dont think our trustee will have an issue with us putting aside any $ for saving, his assistant actually asked us at our 341 why we didnt have any ER fund in our Schedules; so we added it (didnt know we could).