Too much disposable income in Ch. 7

[Heightsman]

When you consider all the money I'm spending just making interest payments on credit cards, I'll have a lot of money left over at the end of the month. How will this affect a Chapter 7 bankrptcy? How much disposable income is too much? How much disposable income can I have before I'd be ineligible to do a chapter 7. Would I then have to do a Chapter 13? How much of my unsecurred debt would I have to then pay back?
Thanks

[2confused]

$100 i believe..and credit card debt doesn't count for a 7...it's all based on living expenses. No nothing about a 13.

[Heightsman]

The reason I'll have all this extra money is because I'll stop paying on credit cards. When you subtract my living expenses from income, I'll have money left over.

[chloe0724]

Heightsman, I had to file a 13 because I had more than $110 left over each month. I was sure it was going to be the same amount I had been paying to the credit cards, but as my attorney pointed out, I have been living off my cards for so long now, that what it actualy costs me to live each month is what my payment will be.

You need to consult an attorney.

[Phillymanhere]

Heightsman,

You need to first do a serious budget analysis.

I was making about $600 a month in credit card payments. So you would think that I would have $600 left once I stopped making payments. Well, I stopped making payments in April and I had less than $100 left over at end of month.

How? Well I was using one card to charge items while using my paycheck to pay off the other credit cards ...

The botom line is I was spending way more than I earned ....Many of us facing BK do NOT have a good sense of finances, do NOT have a good sense of allocating money for anticipated costs.

Think clothes, think shoes, think dental appointments, think doctor's appointments. I have a meeting with a counselor next month who charges $150 per session. That's just one meeting. I also have car inspection next month--who knows what repairs I'll need? I drove out of town recently and I noticed my tires were a bit smooth ... I am thinking I'll need new tires soon .... That's gonna be several hundred dollars.

Summer is coming up and I don't have an a.c. for my apartment; the old one died. Well, I'm gonna need to buy an a.c. most likely.

Also I have student loans that are on forbearance that will be $160 a month when they start back in October ....

You may be different, but I would seriously read a lot about budgets to make sure you're gonna have all that money left over.

[momof5]

The previous poster describes almost perfect how it is possible to seem like you have a lot of money left at the end of the month.

We were paying out nearly $1200 a month in credit card payments. I would then use the credit cards to pay things like phone bill, internet, car insurance, groceries etc.etc.. Always maxing them back out only to start over again next month. Vicious cycle!

So in reality even though it would seem like we would have a lot more money after we stopped paying the credit cards it was as if we just came back to reality.

[Heightsman]

Thanks for all the replies. Yes, it's true I may have less money left over than I thought, but how much will be enough to put me into a 13? Also, if I go into a 13 how much will I have to pay back? Just whatever the dosposable income will cover for 5 years?

[JRScott]

Generally a disposable income in excess of 100 dollars a month is enough. Yes whatever can be paid in 5 years as that's the longest time allowed.

[Flowers]

Heightsman, I had to file a 13 because I had more than $110 left over each month. I was sure it was going to be the same amount I had been paying to the credit cards, but as my attorney pointed out, I have been living off my cards for so long now, that what it actualy costs me to live each month is what my payment will be.

You need to consult an attorney.

Is that the capped amount?? more than $110 ? ?

[lrprn]

Is that the capped amount?? more than $110 ? ?

Looking at the Means Test and Schedules I & J, if you show more than $160/month disposable income then depending on your individual circumstances that can demonstrate the possibility you can support a Ch 13 plan. If you show between $100-160/month, then it's the trustee's call whether to try to push you into a 13 or not. If you show less than $100/month disposable income, then it's very unlikely you can support a Ch 13 plan that pays out as much as your creditors would receive in a Ch 7.

These amounts are not exact - just averages that can vary somewhat depending on your district, your trustee's practices, and your individual financial situation.

If you believe there's a possibility you may be forced into filing Ch 13 rather than Ch 7, then it will help a lot for you to learn as much as you can about how Ch 13 works. Here's two good online resources that aren't too 'lawyer-ly":

http://moranlaw.net/13workings.htm#Chapter%2013%20practice

http://www.uscourts.gov/bankruptcycourts/bankruptcybasics/chapter13.html

[leena]

Dmi

Actually, if you have between $109.00 and something like $180.00 per month in disposable income, it is not just the trustees call if they are going to push you into a chapter 13. In order to push you into a chapter 13, your disposable income either must exceed $10,000.00 in five years *or* be equal to 25% of the debt you are attempting to discharge, whichever is less. If you have, say $150.00 in disposible income per month (which is around 9,000) that nine grand has to equal at least 25% of your debt for you to be in chapter 13 land. If it does not, you are still in a 7.

Most attorneys can and will find a way around this with a below median filer. I would not worry too much.

[MakinMeCrazy]

I have a question about this.........if you are put into a ch 13........and say your disposable income on schedule J is 200$......will the 13 take ONLY that 200 or will they take ALL of your money for the month? in other words does a chapter 13, use only your disposable to pay the plan......example I have 200 disposable a month,....in a 13...will thye take ONLY thta 200 for the plan and let me handle my regular monthly payments (money) or do they take complete control of my monthly money?

[leena]

From what I understand, they take your whole disposable income.

[2manybills]

You will want to include future car expenses and repairs, and property taxes, etc. We should a -300 per month, but we also only had 2 payments left on our truck. So in case the trustee came back and deducted that truck payment, we wanted to be safe.

They never questioned it.

[momisery]

When they looked at our income left over it was after two house payments with no rent coming in, credit cards, and one unsecured note plus the medical bills. We were upside down about a thousand because of the job loss and the tennant loss. Once we are past the BK we will be much better off, and I am glad they do not consider your income after all your bills are removed. I will have enough each month to save some to get us back on our feet I hope. For right now there is no savings at all. I am still worried they will decide that we are not far enough in debt.. lol