Filing ch13 w/ no disposable income?

[Sammy]

We would prefer to file Ch7 but we are above the median income for our state. We would also like to protect two vehicles that may have some equity in them. They will be paid off in less than one year. When going through the numbers, we have no disposable income after calculating allowable expenses.

So, if we continue with Ch13 with no disposable income - how do they calculate "payments" if there's nothing to use for payment.

How will the near-term payoff of the vehicles figure into this?

Thanks!

[bwebb2006]

Required

In order for you to file chapter 13 you must have disposable income. Make sure you have set your expenses within the guidelines allowed for housing, clothing, transportation, etc.

[SinkingFast]

Your attny will "create" disposable income for you.

Report you pay less on clothes than you do. Same with food. Entertainment and gifts are a couple of areas to pull dollars from as well.

It's all a bunch of number juggling. Some based on the Schedules Allowables, some based on what you actually spend, and some based on what the attny knows he/she can and cannot get away with slipping thru the Court.

[anonymuse]

My attorney will not "create disposable income" for me--he said it's Chapter 7 or nothing.

[aa06a47]

I don't think most attorney's will create disposible income for you, however, with that said, what you spend and what your allowed to spend are two different issues, I think that is what SF was saying.

For example, I use to spend on average more than 100/month for clothing, but I generally only go buy cloths about every 3 month. I would usually spend 400 bucks every quarter. My attorney said they would only allow for 100/month (or something like that). If your spending 2000/month on groceries right now, might want to think of less expensive foods to eat.

Chapter 13 is a payment that puts you on a strict budget. You won't be able to spend on certain things what you use to spend. Remember, you won't have a credit card to go put those steaks or that new coat and purse on anymore. It is if you got the cash, you can have it, if not...you have to wait till you get it.

[anonymuse]

I was just looking at how much money I saved last week.

I tried out a vanpool (now I'm on a waiting list). I haven't put gas in my car for a week (there's $50), and I brought my lunch 4 days out of 5 (there's another $20). I'm guessing on my schedules I'll include my old expensive methods of transportation since I don't know when I'll get off the waiting list and permanent on the vanpool. If I was able to get in, I might actually have some disposable income.

[Minnymouth]

Creating disposable income this month and BEING ABLE to create disposable income next month is entirely different......
Don't cut yourself sooooooo short trying to create disposable income that if you do get into a chapter 13, then money is so tight that you cannot meet the plan payments......... then your case will get dismissed.......

Sometimes the only option available to you is Chapter 7...... that was my case...... no choice, no other options..........

[alh]

If you would prefer to file a 7 and have no disposible income, I would file the 7and work on options to protect/buy any equity you have in your cars. You didn't mention what state you were in or how much value you believe your cars have. You may have more options than you realize.

[SinkingFast]

I don't think most attorney's will create disposible income for you, however, with that said, what you spend and what your allowed to spend are two different issues, I think that is what SF was saying.

For example, I use to spend on average more than 100/month for clothing, but I generally only go buy cloths about every 3 month. I would usually spend 400 bucks every quarter. My attorney said they would only allow for 100/month (or something like that). If your spending 2000/month on groceries right now, might want to think of less expensive foods to eat.

Chapter 13 is a payment that puts you on a strict budget. You won't be able to spend on certain things what you use to spend. Remember, you won't have a credit card to go put those steaks or that new coat and purse on anymore. It is if you got the cash, you can have it, if not...you have to wait till you get it.

Thank you, Aa. That's kinda sorta what I did mean.

I was thinking the poster may have ZERO disposable income on the Schedules but needed a Ch 13 to protect an asset or something like that.

Trustees cannot approve a Ch 13 payment plan without realistic expectation that the Debtor has the ability to pay.

If you need Ch 13, but do not have disposable income on paper, your attny can "create" a small amount of disposable income for you. They simply shave a bit off this category here and a little there to get you what you need for a Ch 13 payment.

But, also, like Aa says, you will need to adjust your lifestyle as well.

Not spend as much on food. Find cheaper ways to do things. Stop the newspaper subscription. Quit renting videos. Where ever you can cut corners, you need to do away with non essential expenses. You can save a bit each month on your electric bill simply by setting the thermostat up or down a couple of degrees, summer and winter. Combine trips to save on gas.

What has recently become my personal favorite is Minny's idea. Minny says not to buy anything until you sleep on it over night. I've dubbed it "Minny's 24 Hour Rule". And it works! Money I woulda spent before because it was "Only $20" here and "Only $40" there is money I've kept in my pocket.

THANK YOU, MINNY!!