High income and still a Ch 7?

[mayhave2file]

I make over 125k a year but seem to still pass the means test and have over 150k of unsecured. Is the means test the key or because of my income level does that kick me out to a 13?

I pay child support and have a mortgage and with all the mandatory taxes I don't have much disposable income left.

If I include one of my two kids in my household then I pass the means test with a negative disposable.

One last question. I do not have a car as I use a company car but that may be going away. Can i purchase one prior to filling? Will be much more difficult afterwards.

I live in the Northern District of illinois

Thanks in advance

[mayhave2file]

Also

My home also lost 80k since what i ought it for 2 years ago. Have a HE-loan too so no equity in the house. I want to keep it and continue to make payments.

[HHM]

Bad news, the means test is not the final decision maker on whether you get into a chapter 7.

Good news, if you really have no disposible income, then yes, you can still file a chapter 7 even with high income.

However, because you are a higher end filer, the US Trustee will almost certainly pop in and take a look at your case.

As for a car, yes, you can buy a car before BK, you need to make sure that you do not create an asset with non-exempt equity.

[Help!]

Yes, we made it through a Ch. 7 case with high income - but it was very difficult and the US Trustee scrutinized every part of our petition. Don't believe any lawyer that tells you you're home free if you pass the means test.

[mayhave2file]

how bad?

Do US trustees go to all cases with high income? When you say scrutinized if what did they do?

Thanks

[TEW]

Do a schedule J see how much disposable income you have left when you get done with that.

[Help!]

Do US trustees go to all cases with high income? When you say scrutinized if what did they do?

Thanks

Yes, it is common for high income, high debt petitions to be reviewed by the UST. It is the UST's job to convert a Ch. 7 case to a Ch. 13 case if possible. If they feel a Ch. 7 case is a stretch, they will look for ways to recalculate income/expenses on the means test to put someone into the "presumed abuse" category (this is just a numerical result - not an accusation that there's been any wrongdoing). They may ask for additional documentation, which is similar in scope and depth to the way an IRS audit is described. It doesn't happen often, but know that it is always a possibility and that careful planning/timing can greatly affect the outcome of BK.

[mayhave2file]

Thanks for sharing. I have some time before I have to file but want to get all my ducks in a row. I think I will be unable to continue to make minimum payments in about 6 to 7 months from now. All my accounts are current and I figure 6 months or more would be good as to my cash advances thats I wrote against an account to lower my rates on others. This is a viscous cycle and I got caught up in it. Will probably start talking to attorneys after the first of the year.

[BROKENN]

Good luck and smart on planning! I am glad you found this forum in the beginning!

[mayhave2file]

thanks

I'm glad i found it too. I never imagined being on here. I have to get past the guilt of not paying my debts. 45 years old and never missed a payment. It's hard to pull the trigger but cant keep doing this for much longer. I just hope ot find a good attorney and pray for a chapter 7. It's gonna be close.

[Help!]

You are smart to stay ahead of the curve. If you find yourself a little short and have to choose what to pay and what not to pay, be sure to have a look at the allowed expenses on the means test. Save receipts for those expenses - things like medical/dental bills, charitable contributions (up to 15% of your income is allowed), veterinary bills, utility bills, tuition, daycare, car maintenance, household maintenance, etc.

Keep in mind that you could be asked for statements for all of your accounts, so think about the records you're creating when you swipe a debit card or make a deposit. If you receive checks of any kind (for example as a gift), cash them rather than deposit them. It is best to have only necessary expenses on your statements such as gas, groceries and bill payments. If it's a purchase that could be questioned, pay with cash.

Last piece of advice (having learned the hard way), if you have money in a 401K don't touch it. It's safe where it is but if you borrow against it or withdraw from it this will be counted against you as income. Keep reading and good luck!

[albacore44]

Last piece of advice (having learned the hard way), if you have money in a 401K don't touch it. It's safe where it is but if you borrow against it or withdraw from it this will be counted against you as income.

How many months since a loan/withdrawl are we talking ?? 6 months ??

[Help!]

How many months since a loan/withdrawl are we talking ?? 6 months ??

Any 401K/IRA withdrawals/distributions in the previous six months (ending on the last day of the month before filing) can be counted as income. I was under the mistaken impression that income consisted of what was on paystubs. "Income", at least in our case, was defined by the attorney for the UST as "money received from all sources". That changed the outcome of the means test drastically (and unfairly!) for us.

So, if you're above median find a really good lawyer who is meticulous with your petition and doesn't do anything to draw attention to your case (e.g., errors!). Avoid the UST radar altogether.