Going over my petition

[MNBK7guy]

I received my preliminary petition from my attorney today to go over before I file tomorrow morning. I was going through it and noticed a few things here and there and made notes to talk to him about a few items. The only thing on there that really scares me is Schedule I vs J showing that I have a little over 500 dollars a month left over after expenses. I asked my attorney about this and he said that as long as you are under the median, they won't care about the disposable income. This is in MN. Has anyone else dealt with this before? I am under the median, and I want to trust him on it, but I also do not want to get pushed into a Ch. 13 after filing. Any thoughts would be appreciated. I kept hearing a number of like under 170 or something like that.

[tunskit]

I've also heard, mainly from this board, not to have more than $165 left per month, or the trustee can force you into Ch. 13. Have you forgotten any expenses? Did you use the IRS guidelines for your allowed expenses? I really don't know, but I would be nervous going into a Ch. 7 with that much disposable income showing as available.

[soleprop]

MNBK7Guy, i'm in MN as well and i would urge you to really work on your expenses; you want to show very little disposable income or you'll very likely get pushed into the 13 you're concerned about.

if you actually have $500/month left in disposable income, you are likely a good candidate for the CH13. if you don't, one thing you can do to work on making your actual monthly expenses more realistic is take several months of your bank statements and itemize them into spending categories; this causes you to take a real look at your spending habits, vs just list off the top of your head the biggies.

examples you may be overlooking include public transportation, vehicle maintenance (divide yearly tires and other maint/repair costs by 12 to get the monthly cost), haircuts, newspapers, work lunches, chiropractor visits, dental/eye expenses, hygiene, pet health and necessities...etc. etc. good luck!

[MNBK7guy]

No, I used my actual expenses judging best I could from a years worth of info in Microsoft Money. The biggest problem I have, is one of my expenses was related to my addiction which I wasted tons of money on, so I cant really claim that expense, and what I spent on my addiction, I spent on my car payment before that. So that basically ate up all my disposable money. I will ask my attorney more in depth tomorrow about the 1xx dollar figure. The way he relayed it to me was that was applicable if you were taking the means test and going that route using IRS allowables, that those figures would come into play for presumed abuse, but since I am under the median income, I do not have to do part 2 of the means test. He seems to know what the trustees allow around here, I will trust him if he explains it to me again in detail.

[soleprop]

hmmm. well, you're paying for an expert's opinion, and i'm just your average joan, but everything i've read indicates that there are two 'tests' to pass. being below the median income just means you can file CH7 without the automatic presumed abuse someone who is over the median income may have to hurdle to file the CH7. the next 'test' is the disposable income test. you should read the bk code regarding this:

Any creditor, the trustee or the court may force conversion of a Chapter 7 to Chapter 13 or 11 if the debtor's income is more than the median income in the state, and if the amount of the debtor's income left after deducting allowed expenses over 60 months is greater than $6,000. If the income less expenses for 60 months is more than $6,000 but less than $10,000, conversion is required only if it is more than 25% of the nonpriority unsecured claims.

A debtor can file Chapter 7 if his income less expenses times 60 is less than $6,000. A debtor cannot file Chapter 7 if his income less expenses times 60 is greater than $10,000. If the income less expenses times 60 is between $6,000 and $10,000, it must be less than 25% of the nonpriority unsecured claims.

now, this section of code does not apply to nonconsumer CH7 cases. you haven't said that's the case, so i'm assuming yours is primarily consumer debt.

as $500/month = $30,000 over 60 months, this is why I suggest really looking further into your options. granted i don't know anything else about your situation. but make sure your attorney goes over this section of the bk code with you and explains his position. and then share his position with us here ok???




unrelated to disposable income but a possible additional expense you can claim:

if you car is over six years old and/or over 75,000 miles you can claim and additional $200/ month expenses. It is in the IRS financial handbook, part 5, chapter 8, section 5.8.5.5 (3)

[danaf]

yeah - no way. $500 could easily push you into a 13! Make sure he is using max IRS allowable figures for food, clothing, ect. You can find those figures on http://www.usdoj.gov/ust/. Many a lawyer has screwed up their clients petition or told them wrong info. A chapter 13 would just put more money into his pocket. Sign onto pacer yourself and see what other chapter 7 filers in your area have for their disposable income. Do not sign or allow him to file your petition until you are confident.

[MNBK7guy]

Thanks for posting that info for me. Yes my car is over 6 yrs/75,000 miles old so that is handy info. I was already claiming 240 a month for gasoline and repairs. roughly 150 gas, 90 repairs per month. But the more I read the wording, its also projected expenses not just previous ones, so that is something to consider. That is why we are meeting tomorrow, to go over stuff. He wants to get it filed tomorrow though, as I have garnishments that are going to start. He seems confident this is cut and dried no problems.

[soleprop]

^x2 to danaf's post. this is your case, not your attorney's. the reason you're paying him is to get it done in the way that works for you. keep in mind that attorneys generally charge by the hour in addition to the bk fees they charge for anything that happens past representing you at the 341 (i was quoted $2500 just to get my case filed and be rep'd at the 341). and so far it sounds like this attorney is setting you up for some future work. just my $.02

keep us posted.

[danaf]

good job soleprop! OP - go in there armed with the IRS allowable numbers from here - http://www.usdoj.gov/ust/eo/bapcpa/meanstesting.htm. He needs to be maxing those numbers for you. For ex. the national standards for food, clothing, housekeeping supplies, apparel and services, personal care products, & misc for 1 person is $507. This is $507 no questions asked!!!! Does not matter if you really spend that much each month you can put it down on your petition and the trustee will not question it. Also, you get $57 for out of pocket medical - again - no questions asked. See where I'm going here? You also need to be using max car expenses listed on this site due to the cost of gas.

Your attorney may be confident, but from what you've posted, I'm not confident for you...unless you want to be in a ch 13. I agree with soleprop's $.02. Tell your attorney that your disposable needs to be much lower and just remember, potential garnishments or not, do not succumb to his pressure for you to sign anything. He won't like this but oh well - this is your future, not his. Take the weekend and do the research.

Good luck!