Getting into Chapter 7 when over means?

[Mark80]

I have noticed a handful of members on here talking about being in a Chapter 7 plan when they failed the means test. Some even by 12-15k dollars. I took the means test myself and I fail by about 3k, so my question is how did you guys pull it off? I can't see how you can step around the test results, as it takes into consideration all your exemptions to qualify.

I am really hoping to somehow get into one myself, but according to the legal consumer test I fail.

Thanks!

[laurannm]

Really depends on each debtor's circumstances. A common scenario that allows an above-median debtor to pass the means test when you have a large mortgage payment (one of the actual expenses you are allowed to use, even if it is above IRS standards).

In our case, we are above-median by about $2k. We have a decent-sized mortgage payment, along with 2 cars. Plus I work for the state of MA, and I have about $800 in mandatory retirement deductions each month.

Has your lawyer run a preliminary means test for you yet?

[gophermn]

I did what most are doing when sitting down saying "I think its time". I Googled Means test, took it and failed miserably. I then tweaked some numbers, took it again and failed.
Then I called an attorney, provided all my paperwork and passed the means.

Gist of it is, I was way over the means test via income but my expenses were haunting me. I ended up filing over $600k (two properties).
There are many in here who file pro se and they have a gift I don't have. It was easy for me to take my case to an attorney and let them sift through the stuff.

So my advice to you is don't just Google the Means test thinking that is the 'end-all'. There is a lot more to it than what meets the eye. You have a ton of experienced people in here who took the path of an attorney and those who buckled down and did it themselves.

Good luck!

[ThreadsSnapping]

We were over the median income by about 20K whaen we filed but were about -300 on the means test and -55 on the Schedule J so we qualified to file a Ch. 7.

There are 2 parts to the means test. The first is if you are under the median income for your area or not. If you are, you are done with the means test, no need to complete the rest of it. If you are over the median income, you have to fill out the rest of the means test and see if you have any disposable income to fund a Ch. 13. If you "fail" it/are negative, you then qualify to file a Ch. 7. But if you have more than $110 a month in disposable income you could be forced into a Ch. 13.

Either way you still have to fill out the Schedules I & J and if you have a negative number or less than $110 disposable on the Sch. J then your Ch. 7 should go through.

TS

[Mark80]

I took the one at http://www.legalconsumer.com/bankruptcy/means-test/

So I guess I don't have a shot then, I filled out everything and it told me this,

50 Monthly disposable income (Line 48 - Line 49) $ 327
51 60-month disposable income (Line 50) x 60
Amount you could pay in a hypothetical five-year Chapter 13 plan.
$19,625

I was above the median by 3,500 a year before doing the rest of the test.

In any event is this kind of an indication of how much my payment can be? 327.00 monthly, over 5-years?

In any event that obviously will help me out, as my minimum unsecured payments currently are around 1300 monthly.

Only crappy thing is I am in an ARM mortgage coming due next year, so some of my available income will be eaten up!

Thanks for the input!

[RK05]

There are 2 parts to the means test. The first is if you are under the median income for your area or not. If you are, you are done with the means test, no need to complete the rest of it. If you are over the median income, you have to fill out the rest of the means test and see if you have any disposable income to fund a Ch. 13. If you "fail" it/are negative, you then qualify to file a Ch. 7. But if you have more than $110 a month in disposable income you could be forced into a Ch. 13.

Either way you still have to fill out the Schedules I & J and if you have a negative number or less than $110 disposable on the Sch. J then your Ch. 7 should go through.

TS

I thought you had to do both parts regardless if you pass/under the mean?

Wasn't there some posters on here that were under the means for a CH7 but got put into a CH13 because of their disposible income?

[ThreadsSnapping]

You are not required to fill out the 2nd part of the means test if you are under the median income. Many people do anyway.

Yes you can be under the median income and still have to file a Ch. 13. If you have no/low expenses and no or little secured debt then you will probably have disposable income. The purpose of the means test and the Schedule J is to see if you have any disposable income and can repay some or all of your debt. If you have over $110 in disposable income they can force you into a 13. Some people who are under the median income also file a Ch 13 to try and save their house or car.

TS

[pmed8]

Mark80 check your inbox I sent you a PM

Pmed8

[pmed8]

On a side note I really do NOT like that calculator. How much is your mortgage payment and how much is it going to be? If its more than what that calculator allows then you might end up being ok.

Pmed8

[soleprop]

CH13 payments have to be realistic for the duration of the repayment plan; if your ARM is going to affect a serious change to your disposable income it seems as though you should wait to file and can use the additional expenses to negate your disposable income. but what do i know. ;)

[Mark80]

My ARM is set to change October 2009. I can't wait until then to wait and see what happens, but is there a way for them to take this into consideration during my filing?

The weird thing I am confused on the means test are two numbers it gives me. It says my payment in chapter 13 would be 2100 dollars, and it calculates the trustee fee off of this. Then below it states my total disposable income left after deductions is 356 dollars.

Which number should I be looking at? After all my living expenses all I have left over is 356 a month, so I would assume I couldn't pay back 2100 monthly? But why does it say this?

[soleprop]

i don't know about any of that..but i would say that as you can't wait for the ARM mortgage change to kick in you'll likely have to have your plan changed next October, or your bk converted to a 7, depending on your situation then.

as for your means test questions, hopefully someone else can help you - or you can look at the NOLO CH13 book or ask your attorney?

good luck.

[ThreadsSnapping]

I'm going to guess that the $2100 is icluding your mortgage payment, any car payments and any other secured debt payments. It looks like your payment would be the $2100 + $356 for a total payment of about $2456 including your house, car and other secured payments.

This is just my understanding from playing with the calculator. I could be completely wrong.

TS

[Mark80]

I have no idea either, but I couldnt imagine my payments on the debt alone being over 2000 dollars. Expecially since it does state my only disposable income is 350 or so after the exemptions. Maybe your right, that was the total amount before the house payments and auto payments comes out, which would leave me with around a 300 payment over the plan, well plus auto. Its weird because it calculated the trustee amount based on the 2k, but my attorney said the only payments included here in missouri would be my auto, just to help the trustee get a larger amount as payment. *shrug*