Crap... $6K below median income, but $54

[veloguy]

disposable income per month. Spoke w/ the attorney today and he's very concerned and said the US Trustee will almost certainly file a motion to push us into a Ch.13 particularly b/c we're giving up the house and the Trustees position is that 100% of that mortgage payment is now disposable income. The assumption is that we're just going to live on the street once we give up the house?! This is ridiculous.

I have to go through the numbers again tonight and figure out what we're missing on expenses, but it sounds like we're pretty much screwed. Great.

[lrprn]

we're giving up the house and the Trustees position is that 100% of that mortgage payment is now disposable income. The assumption is that we're just going to live on the street once we give up the house?! This is ridiculous.

I can't believe that your lawyer can't find another $100 in legitimate living expenses every month to show negative disposable income....but let's assume it's not possible.

Here's a potential Plan B: If your case filing is not an emergency and waiting a few months doesn't increase your income on the Means Test signficantly, go find your rental before you file so you'll know how much your monthly payment will be (and also to avoid having a bankruptcy on your credit report for the landlords who care about that). Move in for a few months to get a sense of the flow of expenses. Then file when you know what your true costs in the new location are going to be.

[sandhall]

I had disposable income around $75 dollars a month we gave up a house my attorney submitted a letter to trustee that we would be using house payment money to rent a new place. My chapter 7 went thru after we submitted some personal expenses to the trustee like when we moved our car insurance would go up because of different area, water company was more sometimes you just have to do your own leg work to make it happen.

[PaKettle]

I would delay filing, look for more expenses; make sure you are including EVERYthing you spend, and check the federal government's expense tables for your state.
Not to cast dispersions, but it COULD be your attorney WANTS to convert it to a 13 to make more money...? So you need to make sure he does everything to NOT convert it to a 13!

Come up with more expenses, as long as they're under the maximum's. Surely you just estimated things like household and clothing etc.... add a bit more here and there!

Jeez, that sounds INSANE to convert to a 13 due to an extra $54 a month. Plead with your attorney, beg him to do ANYthing he can to NOT convert to a 13! (or get a new attorney!)

I'm no expert, so take this with a grain of salt. But I would surely be looking for any way possible to avoid a 13 if I were you!

[ameliabedilia]

Could you get a little more coverage on your car to make auto your insurance go up a little?
In my district, lots of filers have about $50 of disposable income, anything under $100 is fine. I am sure your lawyer knows how it works in your district though.

[EveryDayAdam]

Also, if you are $6k below the median income (as your thread title suggests) then the disposable income argument is moot anyway...You qualify for chapter 7 on that fact alone.

Also, $54 of disposable income is $46 below the $100 limit on the means test, so even if you were above the median income for your state, you still qualify by the means test.

I would seriously consider getting a new attorney. To me it sounds like he is trying to push you in to a chapter 13, so he can collect a higher fee.

[pa308]

everydayadam,

I thought that even if you are under the median that your disposable income on i and j had to be 100 or under. Thats what i have been hearing on this board. Was your case opposite of that? The reason i ask is i am way under the median in pa but i am worrying myself sick over disposable income on i and j...

[lrprn]

The reason i ask is i am way under the median in pa but i am worrying myself sick over disposable income on i and j...

Pa, you are overthinking this.

Take a look at the B22A forms used to file Ch 7 - http://www.uscourts.gov/rules/BK_For...m_22A_1006.pdf . Look at Line 15.

When you are below the median, as you move through the Means Test, the first box will end up checked "the presumption does not arise". This means you then skip most of the Means Test and go on to the last Section VII to list a few expenses that are specific to your case (if any) and sign in Section VIII.

Unless you have very unusual circumstances (for example, have income very close to the median and you don't own a house or rent to reduce your income on the Schedules), you very likely shouldn't be showing disposable income on Schedule I and J.

[pa308]

thanks lrprn, actually it says to skip all the way to viii if the presumption does not exist though, but i get your point.

[jp2861]

everydayadam,

I thought that even if you are under the median that your disposable income on i and j had to be 100 or under. Thats what i have been hearing on this board. Was your case opposite of that? The reason i ask is i am way under the median in pa but i am worrying myself sick over disposable income on i and j...

What you're thinking is right. The median is the first determining factor if whether you can even qualify for filing. After that your disposable income comes into play as to which chapter you will file.

[jp2861]

Also, if you are $6k below the median income (as your thread title suggests) then the disposable income argument is moot anyway...You qualify for chapter 7 on that fact alone.

Also, $54 of disposable income is $46 below the $100 limit on the means test, so even if you were above the median income for your state, you still qualify by the means test.

I would seriously consider getting a new attorney. To me it sounds like he is trying to push you in to a chapter 13, so he can collect a higher fee.

It's definitely not a moot point. Just because someone is under the median doesn't automatically dictate a 7. All it basically does is qualify them to file. The disposable income is the biggest factor after the meian. Don't think for a minute that a trustee is not going to push a 13 if someone has enough disposable, even below the median.

[EveryDayAdam]

It's definitely not a moot point. Just because someone is under the median doesn't automatically dictate a 7. All it basically does is qualify them to file. The disposable income is the biggest factor after the meian. Don't think for a minute that a trustee is not going to push a 13 if someone has enough disposable, even below the median.

This information is just plain wrong

from http://en.wikipedia.org/wiki/Bankrup...Protection_Act

The means test applies to filers whose gross income (based on the six month period prior to filing), is above the median income in their state (ranging from $72,451 in Massachusetts to $42,290 in West Virginia, as of 2005). Individuals whose incomes are below the median automatically qualify for Chapter 7. Filers whose incomes are above the median must then calculate their Disposable Monthly Income (DMI) to determine whether they are able to make payments on their debts sufficient to qualify them for Chapter 13.

Simply put: Almost every single person in the US is qualified to file for BK, but in order to file for a chapter 7 BK, you either have to earn below the median income for your state, run through the means test and pass it, or convince a judge that you have special circumstances in your case (extremely rare).

To the OP: go ahead and file for a chapter 7...If your attorney says you don't qualify for a chapter 7 because of the means test, then I think you should immediately fire him and hire another one, because he is just giving you wrong information at this point...most likely because he wants the higher fee of a chapter 13 (usually around double the fee, for little to no extra work).

If you already paid money for this attorney, then i'd suggest cutting your losses and finding another one anyway...a chapter 13 will cost you far more in the long run ($154 x 60 = $10,000 in payments over a 60 month chapter 13, versus about $1500 in attorney and court costs for a chapter 7 case).

[ameliabedilia]

Being under your states median income is NOT a free pass for a Chapter 7. It means you qualify to FILE for a Chapter 7 without the assumption of abuse. You still have to prove to the court that you do not have enough disposable income for a Chapter 13.
If you are under the median income you can bypass the rest of the means test and file a 7 without the automatic presumption of abuse. If you have excess disposable income you can still be routed into a 13. Passing the means test doesn't mean you get an automatic 7, it means you qualify to advance further in the decision process.

I love wikipedia, but it is NOT always totally accurate.

[lrprn]

ameliabedelia is right. The Means Test is Stop 1 and the Schedules are Stop 2 on the way to determining Ch 7 eligibility.

However, considering the thousands of members who have been posting here in the Forum since the Means Test and Schedules went into effect in Oct 2005, not one member who was below their state's median income for their family size and filed Ch 7 has been pushed into a Ch 13 by their trustee because the trustee determined they had sufficient disposable income to support a Ch 13 plan and forced them into changing their chapter.

Not saying it's never happened before....just saying it's very rare.

[PaKettle]

veloguy, go back to your attorney, tell him/her that experts are advising you that you DO qualify for Ch. 7 and want to file Ch. 7 not 13. See what he says to that.

After reading other posts that confirm what I originally said, I think he is trying to force you into a 13 for whatever reason, but not in your best interest.

I would consider firing him, unless he can explain his thinking (and you can confirm that his thinking is correct, here.

Of course I don't have all the facts, and am not an attorney, but if I were you I'd be very suspicious of this attorney and consider firing him. MAYBE you could even get the money back if you threaten to file a complaint (IF you can show that your complaint is legit).

You might consider pretending you don't have an attorney and have a consultation or two with another attorney or two, and run this scenario by them. That will give you a better idea if the attorney you have is telling you the truth or not.