Seriously, is my lawyer just lazy or what...

[AndyChristie]

Wife and I are being told that we have to pass both the median and the means test in order to qualify for ch7. Is that right? Were in AZ, if that makes a difference.

Thought it was check your income, if your over the median income for the state, move on to the means test, if you cant pay all your bills, you pass and qualify, if you have more than XX amt left over, you dont qualify for a chapter 7, only 13.

My lawyer is saying that we have to pass both tests to qualify. and that they use gross income for both. So anything like increasing tax witholdings ( which we need to do cause were going to owe again this year ), or 401K contributions wont affect the outcome of the test.

We are over on the median by like 1100, and over on the means by 730.

I asked if we could either reaffirm our boat instead of letting it go, or add a car payment ( which needs to be done, we were just going to wait until after discharge in hopes of a better rate / deal ). They said we could get the means test under the allowable amount, $100, but would still be over on the median income.

Would someone set me straight please, is this right, or do i need to get a different lawyer?

[BCA2009]

Wife and I are being told that we have to pass both the median and the means test in order to qualify for ch7. Is that right? Were in AZ, if that makes a difference.

Thought it was check your income, if your over the median income for the state, move on to the means test, if you cant pay all your bills, you pass and qualify, if you have more than XX amt left over, you dont qualify for a chapter 7, only 13.

My lawyer is saying that we have to pass both tests to qualify. and that they use gross income for both. So anything like increasing tax witholdings ( which we need to do cause were going to owe again this year ), or 401K contributions wont affect the outcome of the test.

We are over on the median by like 1100, and over on the means by 730.

I asked if we could either reaffirm our boat instead of letting it go, or add a car payment ( which needs to be done, we were just going to wait until after discharge in hopes of a better rate / deal ). They said we could get the means test under the allowable amount, $100, but would still be over on the median income.

Would someone set me straight please, is this right, or do i need to get a different lawyer?

I'm not sure what you mean by "over the means test by 730". But to asnswer your question, you definitely can file chap 7 if you are over the median. I was over by 24K and still passed the means test. It's all about expenses.

You pretty much have to have a very high mortgage note and/or other non-standard expenses such as high medical bills or cost related to some othe necessity to live.

They won't let you include expenses for luxury items (boats, motor homes, etc.) on the means test

So, fill out the means test online and see how it goes.

Tax withholding do count as expenses as long as you aren't overwitholding and getting large refunds. however, I don't know how thye will handle it if you change your withholdings just before you file. My attorney told us that 401K withholdings don't count as expense for the means test. I don't know if this varies by district or not.

You need to see some other attorneys. Becuase were over the median, our attorney charged us $75 to do the detail input of the means test. But it later was applied to his fee.

Don't give up on a Chap 7 after just one attorney.

Good Luck!

[AndyChristie]

okay, thats what i thought.

I mean over on the means test as in, per their means test, we have $730 left over each month.

Irritated now, they said we had to pay the fee in full for them to prepare our case, and i know they are going to give us a hard time about refunding our $1600 so we can go somewhere else.

why is it so damn expensive to declare that you have no money

[liz417]

I wasn't allowed to use my 401k contributions as an expense (I think this varies with Trustees/Districts). You can still file a ch 7 being over the median, as 'BCA' said, it's all about your expenses and your DMI. Have you tried plugging your own numbers at www.legalconsumer.com
I made the mistake of retaining the 1st attorney I saw, who told me I qualified for a ch 7only. I found this board right after and learned that I might qualify for a ch 7. I saw 6 more attorneys and finally found one that would look at my expenses without automatically assuming that I wouldn't qualify for a ch 7 based on my income.

Good Luck!

[OhioFiler]

Tell that attorney you hired him to file a Chapter 7 petition per your initial consultation and either perform or return the retainer.

[NoMoreCards]

Irritated now, they said we had to pay the fee in full for them to prepare our case, and i know they are going to give us a hard time about refunding our $1600 so we can go somewhere else.

It is standard practice to get their entire fee before filing, otherwise you could list their unpaid balance into the BK and the lawyers would never collect their fees.

I see their point, they need to get paid for their work too. But it sure is tough coming up with that money when clearly there is no money available at the time.

I wish you the best.

[StartingOver08]

Definately get another attorney. The one you have doesn't know what he is doing. JMO.

I was substantially over median and filed Ch 7 successfully. Sounds like your attorney doesn't actually understand the schedules. OR, he is looking to fatten up his fee by having you file a Ch 13.

[AndyChristie]

Thank you all for the replies and advice. Very happy i found this site.

We are going to start looking for a new attny. I do get the feeling he is looking to have us file a ch13 then convert to a ch7, because every conversation we have with him he pushes this on us. Lame.

Thanks again all, will post how it works out.

[liz417]

I made the mistake of retaining the 1st attorney I saw, who told me I qualified for a ch 7only. I found this board right after and learned that I might qualify for a ch 7. I saw 6 more attorneys and finally found one that would look at my expenses without automatically assuming that I wouldn't qualify for a ch 7 based on my income.

Good Luck!

Opps! I meant that ch 13

Glad you are going to look into getting another attorney. There are quite a few posters here that have been told to go into a ch 13 then convert to a ch 7. The only problem is that you can't convert UNLESS there is a change in our situtation (job loss, hours cut, etc.). In addition to that the attorney gets paid for filing BOTH cases! So just keep looking...good luck!

[MarieT]

I'm not sure what you mean by "over the means test by 730". But to asnswer your question, you definitely can file chap 7 if you are over the median. I was over by 24K and still passed the means test. It's all about expenses.

You pretty much have to have a very high mortgage note and/or other non-standard expenses such as high medical bills or cost related to some othe necessity to live.

They won't let you include expenses for luxury items (boats, motor homes, etc.) on the means test

So, fill out the means test online and see how it goes.

Tax withholding do count as expenses as long as you aren't overwitholding and getting large refunds. however, I don't know how thye will handle it if you change your withholdings just before you file. My attorney told us that 401K withholdings don't count as expense for the means test. I don't know if this varies by district or not.

You need to see some other attorneys. Because we're over the median, our attorney charged us $75 to do the detail input of the means test. But it later was applied to his fee.

Don't give up on a Chap 7 after just one attorney.

Good Luck!

When I did the online means test, it comes out that we are negative $210 a month. When I met with the attorney, he said that it was highly unlikely that we would qualify for Ch 7 since we are about $40,000 over the median income. Part of me is just thinking he doesn't want to do the work required for it to be a Ch 7. I think he also said he gets an ongoing payment every month on the repayment plan along with the trustee fee but maybe I am confused on that part. If so, I can see why he would be pushing for the Ch 13....kinda sounds like a conflict of interest. I do not see how we can file a Ch 13 if there isn't money left over each month to make a payment to the trustee for the creditors.

The other thing I was also curious about, my husband has been claiming 8 dependents (there are 3 of us) because we needed the cash flow. So on Line 25 of the means test where it asks for taxes, if he was claiming the right number of exemptions, more income taxes would be taken out and we would be in the negative even more. We will not get any money on the tax return as we owe the IRS money.

[MarieT]

Opps! I meant that ch 13

Glad you are going to look into getting another attorney. There are quite a few posters here that have been told to go into a ch 13 then convert to a ch 7. The only problem is that you can't convert UNLESS there is a change in our situtation (job loss, hours cut, etc.). In addition to that the attorney gets paid for filing BOTH cases! So just keep looking...good luck!

Liz...Okay...I should have read down further here. I have only paid the attorney $400 down so far and he gave me a lot of forms to fill out and info and documentation to collect. He also told me that we could convert it for an additional fee to a CH 7. I am really second-guessing myself now...when you went to another attorney...what did you owe the first one? I have really only had the initial consultion which lasted about an hour.

There could possibly be enough change to convert it to a CH 7 for hours cut as my husband usually starts getting his hours cut in the Spring and then through the Summer but it looks like the attorney would just make more money when they should get it right in the first place. It would have been nice to wait a few more months to file but we had a couple creditors threatening wage garnishment and lawsuits. This attorney sxared me half to death because he said if I wasn't absolutely truthful on every form that he owuld drop my case and had that in writing. So now I will be scared to death about what value to put on the "junk" I own...have not bought anything new in years!!

[MarieT]

Definately get another attorney. The one you have doesn't know what he is doing. JMO.

I was substantially over median and filed Ch 7 successfully. Sounds like your attorney doesn't actually understand the schedules. OR, he is looking to fatten up his fee by having you file a Ch 13.

How much over median? We are about $40,000 over but still come out with negative left over to pay creditors when we do the means test.

[StartingOver08]

I was more than you over median income, but the most important part of the equation is your DMI. If your DMI is negative (like mine was) with allowed expenses, or your DMI is less than approx $105/mth, you will be ok for a Ch 7. The key is the DMI using allowed expenses. If your attorney just looks at your income and says: 'Oh, you are over median you file a Ch 13 then convert' - get another attorney.

[MarieT]

I was more than you over median income, but the most important part of the equation is your DMI. If your DMI is negative (like mine was) with allowed expenses, or your DMI is less than approx $105/mth, you will be ok for a Ch 7. The key is the DMI using allowed expenses. If your attorney just looks at your income and says: 'Oh, you are over median you file a Ch 13 then convert' - get another attorney.

What is DMI? Disposable Median Income?

Sorry...I will catch on ...

[lrprn]

What is DMI?

DMI = disposable monthly income

No worries - we all had to learn bankruptcy lingo when we first started hanging out here