Less than $200 over median - Is my Ch 7 dead?

[stgsm]

'Cuz I'm getting the feeling that my attorney thinks it is. Due to some unexpected payroll issues our six month average is now $200 over median. House will probably be foreclosed on before filing (so no house payment) and car is repossessed (so no car payment). No secured assets to "help." We are moving into a rental house and have about $40K in student loans. We own two cheap cars outright. Between the cc debt and the deficiency from the car we probably have at least $30K in unsecured debt (going up daily since we were on a 6 month plan to file bk).

Why do I keep reading about people who are thousands of dollars over median who file ch 7? Is my attorney just being lazy? It didn't seem to be the case but I'm beginning to wonder.

[OutofTime]

The people who are over the median usually can show that thei income and expenses come out either a negative at the end of the month or at least under 180.00 positive dmi, if I'm not nistaken. I was over the median by 2K but my expenses were more than my income. It's going to be hard if you ant use your mortgage and car payments because that is what helped my ase.

[Ann]

Yes, without that mortgage expense it doesn't sound promising. The only thing I can see to help you out at this point (because I too am over the median) would be more monthly expenses. Is a chapter 7 what you want? I'm always afraid of giving out wrong advice but wouldn't a chapter 13 "save" your home? Or is that something you really don't want to pursue?

[stgsm]

Ch 7 is what we want - we made conscious decision to walk away from our home. And we are moving out of state so it's a done deal! We are 4 months into our 6 month plan and got this curve ball so we are just re-evaluating and trying to see if we can still proceed.

If a Ch 7 is dismissed what happens next? Can you automatically convert to a 13? I think I've heard of a no-man's land where you can't get a 7 but don't have enough disposable income for a 13? What happens to people in that situation? My intention is to file bankruptcy this year - I don't care what number but a 7 is preferred.

[andysmom]

We were just over the median for a chapter 7, by a few hundred dollars and couldn't qualify because our expenses showed a positive dmi for a 13. when the 13 test was done our payment should be really tiny because the expenses that could be claimed for the 13 test were more and showed negative dmi- but we do have a mortgage & we're keeping our house. Like you, we don't have car loans or other secured debt. Everything was credit card debt & a 401k loan. So, we're filing chapter 13 the end of this month.
I wish you the very best of luck & i'm sure something will work out for you.

[bobbyquefour]

To be so close, well that just sucks. The problem is the numbers don't lie when it comes to how much money you made and whether you are above or below the median. That is why they have a cut-off point. I guess someone could literally be over by $1. But people have filed chapter 7s still over the median income, but as others have mentioned it is usually because of mortgages, etc.
Good luck to you....I feel for you. Try to stay positive.
Bobby

[keepinitreal]

Since you haven't filed yet, is it possible that in the near future your 6-month lookback will be under the median? All it takes is for the oldest month with an extra pay period to drop off while the newest month with no extra pay periods is added in.

Try to calculate what your different 6-month lookbacks will be for the next few months. You may be surprised to find that you'll be eligible if you wait a short time.

[Bkman2]

I was over by $169 a month but they had my DMI at $277. My chapter 13 payment is $255. I wanted to go chapter 7 because my house isn't part of my BK but attorney said I had a high DMI so I had to go 13. After my 341 meeting in Feb the trustee had the attorney re-do the numbers because my wife didn't file and they didn't add in all of her debt/bills. That with the higher mortgage and auto ins put my DMI at $87 a month. Not sure what will happen now.

[Ann]

Since you haven't filed yet, is it possible that in the near future your 6-month lookback will be under the median? All it takes is for the oldest month with an extra pay period to drop off while the newest month with no extra pay periods is added in.

Try to calculate what your different 6-month lookbacks will be for the next few months. You may be surprised to find that you'll be eligible if you wait a short time.

Excellent advice, keepinitreal!!! That is what we are in the process of trying to achieve! Best of luck to you. With only a few hundred dollars standing in your way I bet getting into a 7 wont be as difficult as it may seem if you can manage to wait for your income to drop down even a little!

[andysmom]

Our income was over by a few hundred dollars, and we did wait, unfortunately nothing changed & won't change- if anything it'll get higher- my husband has alot of mandatory overtimme and what threw us over the median was quarterly gain share checks - which aren't alot but they just started last year and he's due for oe the end of this month.
The "problem" for us with a chapter 7 is that all of our debt is unsecured- call credit cards- except the house which is a small mortgage pymt (less than $800 w/taxes & insurance). chapter 7 means test shows $370 -something dmi- but when you do the allowable expenses for a chapter 13- where 401k loans are allowed- we show negative dmi due to the 401k loan so our plan actually calls for nothing to unsecured just trustee, lawyer & 401k loan (house paid outside bk). 401k loan will end now about 6 months before bk so we were told that money would then go into the 13 plan. Lawyer already spoke with trustee who said all is fine, 'xcept the last 6 months total of payments will be spread out and divided over the 60 month plan- which is fine - and I'm sure they'll want the full last 6 months payments too, which is okay. I'm finding it hard to believe this will be okay- with such a low payment- but lawyer has almost 30 years bk experience, talked to the trustee & says not to worry at all that the numbers are what they are.
I guess we shall see in the next month or two.....

[stgsm]

No chance of income going down in the foreseeable future. My husband got a new job and a nice raise which in the real world is something to celebrate. In our world it just pushed us so close to the line that one little issue pushed us over. And there is a possibility of a bonus the month after we file so we have to get it done just as soon as our 6 month look back is complete in June. It's so ironic that making more money doesn't help us more. We can't make a dent in this debt even with a higher income. Just 3 more months and hopefully this will all be worry for nothing.

[andysmom]

stgsm- i feel your pain! sounds like we're in exactly the same boat. have you filed yet? we're doing a 13 in 2 weeks..... best of luck

[stgsm]

Filing July 1. My lawyer warned us of the small possibility that we'll get dismissed or converted to a 13. We've decided to play the odds and go for the 7 but make contingency plans if we get dismissed or pushed to the 13. It's unnerving but we are in too far now to quit!

[ColoradoBell]

Maybe I'm doing the means test wrong (Nolo...it automatically figures it out for you using IRS maximums.) Or maybe cuz I'm older and get to out extra for HSA payments, but I have high alimony (but only untl July, then nothing) and was worried I couldn't pass...But if the form is right, it wasn't a problem. Of course maybe I 'm using it wrong?????

One thing I read about is that often people don't take out enough from their paychecks fo rincome taxes...You are allowed to take about 25% out. A lot of people have their employer take out less so that they can have more cash during the year. So check your numbers and if you can take out more, it might get you under the magic number!

[DeadManCrawling]

Term life insurance could be your new best friend.

I would look into it, and ask the attorney.

It could add a couple hundred bucks in legit expenses. If you chose to drop it later, well, that is your business. But, life insurance is always wise.