Is there any chance I would have to do a Ch. 13?

[PaKettle]

I have not done a complete Means Test anaylysis, but when I looked at the Income requirements for my state, for 2 people, we are $10k under the figure they give, and have - my guesstimate, I have not figureed it out yet - about $50-60k in debt - just credit card and unsecured loan debts, I mean - our minimum monthly payments being about $2k/month, and our income being about $2500/month, before rent, food, gas, etc..

Also the reason we are filing is because my income has gone down more than 20% in the past year, and we had $17k in dental bills last year and my wife lost her (min. wage) job and now her unemployment is running out and I cannot make the payments on time this month and have money left over for food and rent and car payment.

Is there any chance we would be forced into a Ch.13? I'd rather struggle through debt reorganization on my own, rather than file a Ch. 13 and have The State telling me what to do... But on the other hand, I'd much rather get a new start with Chapter 7.

[freshstart06]

if you are under the median then you are fine. don't worry. Weird stuff can happen but don't worry because it is rare if you are under.

[PaKettle]

Thank you, that's a big relief! I'll be talking to an attorney within a couple of weeks, hopefully, so I'll know more then... I also ordered the Nolo Ch. 7 book, which should give me a lot of information, and knowledge is power.

[keepmine]

Whoa!
You still need to work through the income and expense schedules. If you end up with as little as $166/month disposable income you can still be forced into a Chapter 13.

[Granny]

Double check that income too, you still need to calculate the last months months. If it has been slowly declining, it could have been higher in the first part of the 6 month look back period. You can't just use today's figures multiplied by 6. Use the actual numbers.

[PaKettle]

Whoa!
You still need to work through the income and expense schedules. If you end up with as little as $166/month disposable income you can still be forced into a Chapter 13.

Really? So if -not counting my credit payments - I have $166 disposable income they will force me into a Ch. 13?

Then how much of that $166 would they take for the plan?

I can't believe the gummit expects people to have a life with $166/month disposable income.

Then, what if you miss payments on the Ch. 13 plan? What do they do to you then? There is no debtor's prison as I understand it, so...?

I guess they garnish your wages, then, huh? And take your tax returns if any?

[PaKettle]

I work as a daily hire, that is my days per week are not "fixed" - they can cut me back any week they so choose, and I can be "unavailable" for work when I so choose.
Would it behoove me to have reason to be unavailable some days per week to force my income down? I could, for example, have to take time off for training in my field, or for doctor or dental appointments, or for being sick, etc... (we don't have sick days)

Is it likely anyone would check to see WHY I was not working as many days, or would they just look at my income and let it go at that? Even if they did check as to why, being sick or having to take time off (unpaid) for a surgery or to visit a dying relative, etc. would be legit, I presume.

[lrprn]

Really? So if -not counting my credit payments - I have $166 disposable income they will force me into a Ch. 13?

Actually it's more like $180/month since April 2007, but yes, if you have more than this showing on your Means Test as disposable income, then yes, you can be forced into a Ch 13.

Then how much of that $166 would they take for the plan?

All of it. Every penny.

what if you miss payments on the Ch. 13 plan? What do they do to you then? There is no debtor's prison as I understand it, so...?

The trustee dismisses your plan and you once again owe everything that you owed when you filed plus all the late fees and APR increases that have accrued since you filed, of course. Your creditors and collectors can again come after you for what you owe. And it can take anywhere from a few weeks up to six months to re-file again, after which you are only guaranteed 30 days of automatic stay unless you petition the court for more.

I guess they garnish your wages, then, huh? And take your tax returns if any?

Anything goes - the creditor and collection doors are wide open again if your case is dismissed.

[PaKettle]

Under the average income but still forced into a Ch. 13?

Whoa!
You still need to work through the income and expense schedules. If you end up with as little as $166/month disposable income you can still be forced into a Chapter 13.

[hocus]

If you're really under the median by $10,000 you shouldn't have any problem. The trustee would have to object and they would need a real reason to do so.

As a practical matter, if you're making that little, you aren't going to have $166 a month left over anyway.

Personally, I was glad I hired a lawyer. It was a big load off my mind. If you are at all worried, a lawyer would make sure that you don't have too much left over after you work out your expenses.

[JRScott]

If you have an income that is 10k less than the median income for your state, then you don't have to really do more than just the first few lines of the means test. You only have to fill out all the pages if your income is over the median.

I believe based on what you've said here there is no way they'd force you into a Chapter 13.

[keepmine]

The only thing that being under the median income means is, the presumption of abuse does not arise.
It does not mean that you now have a free pass. You still must complete schedules I and J.

It's far to long for a copy and paste.

http://doney.net/bkcode/11usc0707.htm

[demismom]

What that's saying is if you're OVER the median for your state, you need to complete the entire Means Test. If at the end of the test it's determined that you DON'T have any disposable income then you can still file Chapter 7. It's sort of like a double check thing, I suppose.

[keepmine]

You won't find the word median income in that section.
You will find this sentence:

) After notice and a hearing, the court, on its own motion or on a motion by the United States trustee, trustee (or bankruptcy administrator, if any), or any party in interest, may dismiss a case filed by an individual debtor under this chapter whose debts are primarily consumer debts, or, with the debtor's consent, convert such a case to a case under chapter 11 or 13 of this title, if it finds that the granting of relief would be an abuse of the provisions of this chapter.

Every so often, we get a post from a young person choking on debt who has moved back home and is living rent free. They're still struggling to pay their bills and try to file a Chapter 7 and discover that, though they are below the median income, they have no living expenses thus, disposable income.

lrprn posted a case a month or so ago where a recent grad was forced to convert to a Chapter 13. This one had a few twists {one being the trustee and judge felt her efforts to find suitable employment were lacking} but, they also found she had disposable income because, her BF was paying the majority of there living expenses.
If you see this lrprn, could you find that old post? I need to bookmark it.

[lrprn]

If you see this lrprn, could you find that old post? I need to bookmark it.

Here it is - US Bankruptcy Court Eastern District of Wisconsin's case Charmaine Richie 06-20188 URL version at http://216.239.51.104/search?q=cache...lnk&cd=1&gl=us

The Richie case is unusual and the specifics have no relationship to Pa's situation. Richie had just graduated with a masters degree and was preparing to start a new job well above the WI median income. Her trustee challenged her Ch 7 filing using 'totality of circumstances' stating that it was fraud for her to file Ch 7 knowing that within months she would have a job that would allow her to repay some of her debt. The judge in this district agreed and offered Richie the option of converting to Ch 13 to avoid having her Ch 7 case dismissed.

99% of the time when a filer is below the median income for their family size in their state, they are able to file Ch 7 because there is no absolute expectation of a higher paying job within months of filing as there was in this situation.