I'm below Median income level (Chap 7), but...

[Despotes]

If the judge decides I can pay something to my creditors for 5 years will I then have to start the whole process over thus pay more money to the attorney to file for Chap 13?

Provided I filled out the Means Test accurately, the Monthly Disposable Income came out to be $ -92. Does that make it likely a judge will deny a Chap 7 and require Chap 13?

I've started not paying my credit cards to save for an attorney. Not a good feeling. How long can I wait to file before they attempt to garnish?

[flyinbroke]

If the judge decides I can pay something to my creditors for 5 years will I then have to start the whole process over thus pay more money to the attorney to file for Chap 13?

Provided I filled out the Means Test accurately, the Monthly Disposable Income came out to be $ -92. Does that make it likely a judge will deny a Chap 7 and require Chap 13?

I've started not paying my credit cards to save for an attorney. Not a good feeling. How long can I wait to file before they attempt to garnish?

They can't garnish without a lawsuit. They have to take you to court first. Some will sue six months out, some have not paid for well over a year with no suits.

If your disposable is really negative you may qualify for a 7. however, the means test is more complicated than what is online, and uses IRS guidelines rather than actual payments (for example, my rent and utilities is around 1650, IRS said mine should be 775 for all).

If your disposable income is under something like 160, you will fall into a 7; if it is 1 dollar over, you can be in a 13. However bear in mind that you may not pay in full, and after the time for a 13 is done, the remainder of the debt is discharged.

[Despotes]

If the judge or Trustee determines it will be handled as a Chapter 13 not a 7 I'd have to start the whole filing process over again resulting paying double to my attorney?

I've been keeping up with making only minimum payments on my cards so practically I do have money left for some payment. Wouldn't that be the determining factor on my ability to pay thus only be allowed to file Chap 13?

If I were to tell the Trustee I stopped paying my bills (to save for an attorney) then logically he/she would know I was able to pay my bills. (Unfortuntely it would take 100 + years to pay them off.)

[Despotes]

Anybody have an answer?

[LimpDisc]

Being able to make your minimum payments each month doesn't mean you can afford to pay the creditors back. If you're just making the minimums, my guess is that you are cutting corners in other areas of expenses to keep up those payments.

It's impossible for us to get an exact picture of your financial situation, but I'd bet an attorney would come up with a negative DMI just as you have. That negative $92 DMI figure you came up is a long way from being pushed into a CH13 for a below median income filer.

[lulabelle]

I'm still trying to understand how the whole process works, but what's the point of the median income guidelines for determining presumption of abuse if you can be below the median and still get pushed into a 13? I don't get it!

[aces67]

If you have enough disposable income left over then you might get pushed into a 13. I'm thinking though that you have to have $100-150 a month left over. Hopefully someone else can chime in and verify the amount.

[justbroke]

I'm still trying to understand how the whole process works, but what's the point of the median income guidelines for determining presumption of abuse if you can be below the median and still get pushed into a 13? I don't get it!

One is a what they call a "bright line test", to easily find those that don't qualify. The next level is the full Means Test, further weeding out those who don't qualify. Finally, the "totality of circumstances" is a much more involved and the last line of defense to insure that those who have an ability to pay, don't receive a Chapter 7 discharge.

For the record, the median-income guidelines do not determine abuse at all. It just allows one to "pass" the Means Test by avoiding the convoluted numbers game, that's all. However, that doesn't mean you still qualify for a Chapter 7 discharge. It only means that you're not subject to the complexity of the Means Test.

You have to remember that the changes to the Bankruptcy Code in 2005 (BAPCPA of 2005) were designed to force more people into Chapter 13s (period). It's a matter of public policy... not law.

[Despotes]

If pushed into Chap 13, how much more time is added to the overall process and additional attorney costs?

[flyinbroke]

My CH13 will cost with lawyer #1 3400. 400 is needed to retain lawyer, the 3K remaining is rolled into the monthly payment. The trustee gets a percentage of your payback number; average is around 10 percent. The remainder goes to creditors, usually this runs for a five year period.

As justbroke says, the new laws were not for the benefit of the BK filer, it is for the creditors and the new means testing is designed to force as many into a 13 as possible. If you have a negative number for disposable, you won't be though.

[HakunaMatata]

I was a just below (on the brink of inching over) median filer with a whopping DMI of $30. However, in the months leading up to filing, I managed to pay unsecured creditors $400+ monthly. How? Because I lived far below standards. Every dime I made was applied toward a bill. Ha...some talk of beans and rice. I stuck with beans. (Take that Dave Ramsey ). Okay, a little dramatic. My point...I had legitimate expenses. I simply didn't know this until my attorney demonstrated it for me. Quite honestly, I was shocked I was bankrupt.

[lulabelle]

Oh boy, now I'm even more nervous than I was before. Our six month look-back shows us to be $11,000 below the median. So we move on to the next step, right? Our expenses? Our attorney came up with -$68 on that form. So can anyone further explain the "totality of circumstances" to me?

Our expenses are legit, but I'm afraid that there are so many areas he could nitpick. Our house payment is higher because we have a 25 year mortgage. Some of our other amounts (food, clothing, etc) are also higher because we have a large family. Then there's the matter of our tax return from last year - our income was at least $12,000 higher than we anticipate this year. And then there's the fact that we're going to be an asset case........I am so worried about all of this!

[justbroke]

Oh boy, now I'm even more nervous than I was before. Our six month look-back shows us to be $11,000 below the median. So we move on to the next step, right? Our expenses? Our attorney came up with -$68 on that form. So can anyone further explain the "totality of circumstances" to me?

I'll explain totality of circumstances in a moment. Because you are under-the-median, the likelihood of the United States Trustee (UST) becoming "interested" in your case is extremely low! If your schedule J is at -$68 and you are not surrendering your home and counting those payments... you have no worries.

The "totality of circumstances" really goes to those people who pass the means test by including surrendered items in the Means Test. While the UST can't directly attack the Means Test (although they have before, and lose always), they can say that the "totality of circumstances" show that since you are no longer making that "mortgage" payment, you now have the ability to fund a Chapter 13.

For you... I wouldn't worry at all about "totality of circumstances". it's usually only above-median filers that the UST is trying to force into a Chapter 13.

[lulabelle]

Thank you so much for explaining that! I think I'm just programmed to expect the worst right now. Our first attorney was pushing us into a 13, when I really felt we qualified for a 7. He warned us that the UST would push us into a 13 anyway because we "still have a good income". This is also the attorney that was going to use our numbers for our asset amounts, was going to file us with $1000 in our checking account (our house payment was about to come out) and wanted to put in a $6500 "cushion" into our payback amount. We fired him the next day. But since then I've been worried that we'll still end up in a 13. You have made me feel much better.

[SURV69]

TOTALITY OF CIRCUMSTANCES . . . seems more potentially like trustee out of control

Honestly, I don't understand why everything has to be down in writing . . . in black and white for everyone to know what "is" and what "isn't", only to have something like "totality of circumstances", meaning that well, maybe the law's not quite black & white.

As President Clinton said . . . almost prophetically(considering this) . . . depends on what the meaning of "is". . . is.