Well under Means test but still too much disposable income?

[SocalBroke]

Had my first meeting with my lawyer today and ran into a snafu I didn't count on. He states I'm definitely under the means test without a doubt but I may have to go to chapter 13 because of too much disposable income?? I didn't know that was possible. I have $48,000 in debt, make about $37,000 a year. He states because my rent is low (I don't live in the best area) and my utilities are low, he's showing an excess of $400.00 a month in income. Has anyone else had a problem like this?

[TEW]

Sure if you have income but no expenses you have money to pay a plan.
This is where the planing for your BK comes in.
Is your income going to stay the same?
Do you have a good car?
Get a better appartment?

[SocalBroke]

Well, like an idiot, I thought 'planning' for your b/k only applied if you made over the means test. I guess this can serve as a good example of what NOT to do. My lease is up in May but since I stopped paying my credit cards last month, I strongly doubt I'd be able to get anywhere decent (plus my partner hates moving with a passion). I could try to postpone it a couple of months but now that I started this, I so want it to be over and to be looking at it from the other side.

First off, let me preface this by saying I am in no way trying to do anything shady or illegal but I found myself trying to ask my lawyer questions on how I could 'make' myself qualify for the chapter 7 without coming out and asking him what I could do. When I started the year, I trimmed down some expenses like cable t.v. , sirius radio etc trying to save some money and now I'm wondering if it's too late to kick them back up. Morally, it might be questionable, but then again, so is offering more credit to someone who is already way in over their head and using credit for day to day living.

Anyways, thanks for the reply and the heads-up. I guess I'll wait to hear back from the lawyer regarding some of his number crunching and take it from there.

[eddiep]

I don't think that is shady, many people here are posting looking for expenses. Are you sure you haven't forgotten something like doctor visits, prescriptions etc.. Also I think it is acceptable to let your belt out a little, you cut your budget to keep current on your living expenses while you were making less money, now you should be able to live "normally". Do a search for expenses, there are many posts on this topic.

[poorold]

I thought if you fall below the median income, it is YOUR option whether to file a Chapter 7 or not.

If so, a Chapter 7 is a liquidation and would in no way involve any repayment plan.

I thought the means test was instituted to determine if "they" can force you into a Chapter 13 repayment plan.

If you are below the median income, you automatically qualify for Chapter 7 and they cannot force Chapter 13 or any repayment plan on you.


Is my understanding incorrect????

[kathy4530050]

Had my first meeting with my lawyer today and ran into a snafu I didn't count on. He states I'm definitely under the means test without a doubt but I may have to go to chapter 13 because of too much disposable income?? I didn't know that was possible. I have $48,000 in debt, make about $37,000 a year. He states because my rent is low (I don't live in the best area) and my utilities are low, he's showing an excess of $400.00 a month in income. Has anyone else had a problem like this?

I'm confused. Are you saying that you are UNDER the MEDIAN or that you PASSED the MEANS test? I thought if you were under the median you were home free. I'm guessing then that you aren't under the median. Is that right?

[LuciluS]

Are you sure you have all your expenses listed? Medical bills paid(doctors, dentist, xrays tests), prescriptions, eyeglasses, health insurance, church contributions (same as what is on your income tax return), cell phone, pet expenses (limited, but your attorney will know how much) renter's insurance, auto insurance.

We stopped paying most of our credit cards then end of Sept. 08 and will not be filing util Sept. 09 as we need some Jan-Feb 09 income to drop off.

Once we had paid a retainer to our Attorney (who is paid in full now) he told us we could give out his name, address and phone number to the Credit Card Companies. So far so good on nice Credit Card Calls. Two have been turned over to a collection agency, but only received a normal letter in the mail & Attorney said ignore them unless we get something Certified by Post Office, UPS or FedEx.

We voluntarily surrended our Motorhome in Nov. 08. Took several phone calls to get them to pick it up. Still owe some after the auction, but they haven't bothered us.

I know you want to get the ball rolling, but if there isn't anything 'Urgent' you might want to plan your bankruptcy and add some more expenses.

Unless you rent through a large management firm, you might be suprised at the rentals due to real estate sales being down. Might have to pay a larger Deposit.

Just some Ideas.

Luci

PS You might want to get a copy of how your Attorney figured your disposable income and go over it very carefully. FYI - Attorney's make more money in a Chapter 13

[floridian]

Is my understanding incorrect????

nope, its not correct, DMI is a big issue...

[tay666]

I'm confused. Are you saying that you are UNDER the MEDIAN or that you PASSED the MEANS test? I thought if you were under the median you were home free. I'm guessing then that you aren't under the median. Is that right?

Nope.
First you have to see if you pass the means test.
If you do that, then there is no presumtion of abuse.

Then they compair I and J, and if you have too much disposable income, then they say you have money to repay some of your debts and throw you into a CH13.

[LuciluS]

Nope.
First you have to see if you pass the means test.
If you do that, then there is no presumtion of abuse.

Then they compair I and J, and if you have too much disposable income, then they say you have money to repay some of your debts and throw you into a CH13.

I believe the DMI must be less than $167 to qualify for a Chapter 7. Someone correct me if I'm wrong. No problem in our household.

Our medical bills each year are about 70% of our expenses. Hubby and I say every year, next year has to be a better year. Not! I've had $4,464 worth of dental work, Breast Biopsy, Skin Cancer Surgery so far this year.

Hubby has been in the hospital since last Wed. Urgent Care couldn't get a blood pressure reading. In ambulance, it was 60/40. In ER a nurse kept coming in and tilting the gurney head down so the blood would flow to his brain. High Fever, Cellulitis in leg where vein was stripped in 2/07 for 5 bypass surgery, but this time it went all the way to his Groin. He is Anemic and possibly Diabetic. More tests being given. Our prescriptions are $500.

Our furkid, Miss Luci (shih tzu) is on 2 prescriptions and prescription dog food for the rest of her life to the tune of about $100 a month. Attorney is not sure what we are going to be allowed for her expenses. But, Hey, when hubby is working he is usually gone from Sun am - Fri pm. I need a Watch Dog (she kisses everyone who stoops down to pet her) and the Alarm System.

If you want to know the honest truth, I'm 100% disabled and Miss Luci is just like having a toddler in the house. My husband disagrees. He says she keeps him mobile as he his 6'6", size 16 shoes and get down on his hands and knees and chases her all around the house. I told him, you are not with her 24/7 like I am.

[SocalBroke]

Hi again all and thanks for the clarifications. Received an email from my lawyer who said it looks like we may have to include all my partner's income and expenses even though I am the only one filing and the federal govt. doesn't recognize same sex marriage. Not sure I agree with him based on all the research I did online but I gave him the information and asked him to run the numbers both way. If he's right, this will probably bring up a slew of other problems.

I think one thing I am reconsidering is this 'rush' to get this done. With a little more planning this might be salvageable (or at least not quite as bad). I think if I can fend off the calls, I can start living 'normally' (as in buying necessities like clothes and food instead of using the money for credit card bills) and have a better idea of what my 'true budget' should be.

[SocalBroke]

I believe the DMI must be less than $167 to qualify for a Chapter 7. Someone correct me if I'm wrong. No problem in our household.

Our medical bills each year are about 70% of our expenses. Hubby and I say every year, next year has to be a better year. Not! I've had $4,464 worth of dental work, Breast Biopsy, Skin Cancer Surgery so far this year.

Hubby has been in the hospital since last Wed. Urgent Care couldn't get a blood pressure reading. In ambulance, it was 60/40. In ER a nurse kept coming in and tilting the gurney head down so the blood would flow to his brain. High Fever, Cellulitis in leg where vein was stripped in 2/07 for 5 bypass surgery, but this time it went all the way to his Groin. He is Anemic and possibly Diabetic. More tests being given. Our prescriptions are $500.

Our furkid, Miss Luci (shih tzu) is on 2 prescriptions and prescription dog food for the rest of her life to the tune of about $100 a month. Attorney is not sure what we are going to be allowed for her expenses. But, Hey, when hubby is working he is usually gone from Sun am - Fri pm. I need a Watch Dog (she kisses everyone who stoops down to pet her) and the Alarm System.

If you want to know the honest truth, I'm 100% disabled and Miss Luci is just like having a toddler in the house. My husband disagrees. He says she keeps him mobile as he his 6'6", size 16 shoes and get down on his hands and knees and chases her all around the house. I told him, you are not with her 24/7 like I am.

Wow, thanks for keeping things in perspective. Even though it doesn't seem like it sometimes, there are things worse than a call or two from a nasty collector. Best of luck and I hope your hubby gets better real soon!

[LuciluS]

I think one thing I am reconsidering is this 'rush' to get this done. With a little more planning this might be salvageable (or at least not quite as bad). I think if I can fend off the calls, I can start living 'normally' (as in buying necessities like clothes and food instead of using the money for credit card bills) and have a better idea of what my 'true budget' should be.

I'm so glad you are not going to 'rush' into a Chapter 7 Bankruptcy as you could easily get blindsided by your Attorney and or Trustee.

I've spent since Oct. 1, 2008 reading this forum and asking a few questions. There is a Search up in the Blue Area. You could type in DMI & click on posts (i don't care for the thread option) and skim through the answers. I think it was Hub or HHM who taught me my Furniture is not "Antique...It's Old" when listing your personal property. I have learned so much about a Chapter 7 Bankruptcy from this forum, I feel quite confidant our Bankruptcy will be a Breeze.

But after meeting with the Attorney in 9/08, I came home and cried for several days. Several members have stated Filing Bankruptcy is a "Business Decision" and you need to leave your emotions out of it. It's the last thing I say when I go to bed and it's the first thing I say when I get up in the morning

When we stopped using our Credit Cards, money was kind of tight for the 1 1/2 months. By then, you get a 'feel' of things. Start keeping receipts for Everything. Several have posted the more Paperwork you give the Trustee the better. I have an Excel Spreadsheet for each month and it is has columns for Utilities, Gas, Groceries, Medical Bills, hubby's OTR Truck Driving Expenses and a Misc. column. I print it out each month and staple all the receipts to it. I had to buy a Big Stapler as the Truck expenses are thick.

[willowhare]

I ran into the same problem when I prepared to file. Make sure you are not using the budget numbers from the days when you had to make sure you had enough money to pay the credit card bills. This particular schedule is meant to be a look forward--how you will be living after your discharge.

So, if you have been cutting back on needed things like necessary clothing, decent food, car repairs, dental, heating, etc., consider what you will be able to start spending on those things now that you have stopped paying the credit cards. It may be a good idea to start spending on these things, keep track of the expenses, and then go back and re-calculate the numbers in a month or two. That alone may solve the problem, as it did with me. Also, take a look at things like renter's and auto insurance. You may be able to bump up the amount of insurance you have now, thus raising your monthly payment. You can always dial it back after filing.

Don't forget to factor in auto repairs, dental care, gym membership (you may be able to sneak it in under medical if you can get a doctor's OK).

[novayalife]

Look at IRS standards for living. We put down a figure for groceries for a family of 4 and attorney stated, " Its a bit low". And indeed, to actually figure in eating out and good food for the family we bumped that up another 300 bucks a month. Then consider a budget for car maintenance, contacts for the year, prescriptions, out of pocket medical expenses, and average those figures into a montly budget. We were under the median for income in our state but still had to show that we had no money left over every month so we could stay chapter 7. Good luck!