Have to file CH 13, but our numbers have NO disposable income! Please help!

[Guest123]

I don't understand what you are posting about. The definition of DMI is what's left after paying the secured and priority creditors. Qualification of a Chapter 7 is not contingent that you are able to actually pay your secured creditors. If you were to write that in a Chapter 13, you need enough "current monthly income" (CMI) or income in general to satisfy secured and priority creditors, then I would agree that you need the income.

Bankruptcy practice isn't always so easily confined to a simple statement; just as HHM pointed out that DMI itself could be subjective. I think what you're trying to say -- which didn't come across that well -- is that if you can't "justify" the secured debt payments then you can't use them in your numbers. Not only have I never seen that done in practice (or challenged), you are allowed to claim anything contractually due. That does not make it where you "can not file" a Chapter 7. It may have a very hard-line UST looking at "good faith" issues, but there are no other genuine issues. (I will add that there are some local (District) practices where they may not allow you to claim a secured debt that you are not reaffirming, but that's a different issue. Your DMI would be larger (based on Schedule I/J).)

Having enough "income" (CMI) to pay for secured debts does not disqualify you for a discharge in a Chapter 7 -- even if your income isn't enough to pay secured creditors! What the court would do in that situation, over or under-the-median, is to not allow reaffirmations. I have never read a single case where discharge was being denied where the debtor was over/under median and did not have enough income to pay secured or priority creditors.

I will say it again... do not let any attorney tell you that you don't qualify for Chapter 7 simply because you are over the median. It is all about the numbers (and DMI).

If you don't have enough DMI to cover secure or priority creditors then you can't fund a Ch13 and that doesn't mean you quailify for a Ch7 is all I am saying.

[HHM]

Something is getting lost in translation here...

If you don't have enough "C"MI (current monthly income) to cover secured debts and all other living expenses (feasible), then correct, you couldn't fund a chapter 13 plan. But you should be able to qualify for chapter 7 unless the secured debts in question are unreasonable (e.g. $1,000 car payment, etc)

If you don't have enough "D"MI (disposable monthly income) to pay "priority" claims in a chapter 13, (e.g. $600,000 in priority taxes and the person now only earns $60,000 a year) then you could not get a plan confirmed. HOWEVER, you should still be able to finagle a chapter 7 because you can claim "priority" claims on the chapter 7 means test and amortize them over 60 months and show that you have no DMI.

The only time you couldn't do a chapter 7 is if the person was simply not eligible for chapter 7.

[GoodyYearCap]

I can say that we were about $14k over the means test for CH 7, and our attorney did nothing to try to get us into a CH 7. Instead, our 60 month payments are over $400/month. He is a total d-bag, and I'd like to fire him. Our 341 is Feb 21st- and I seriously think our attorney wouldn't even go to bat for us if the Trustee was to object to something.

I REALLY wish I would have interviewed a couple more before jumping the gun with this guy.

[davetedge]

I'd give serious thought to ditching your attorney and converting to a Ch 7 before your 341. The cost of a new attorney would be a bit of a downer, but you've done all of the heavy lifting already with the initial filing. Also, a good attorney should be able to walk you through how to execute the conversion.