Scared of going back to 13...

[Morgon64]

(Apologies to anyone who has already heard some of this story already)

Okay, so I've figured out that since my husband is less than 540 days post redeployment from overseas, we don't have to worry about the means test or staying below the median income for our state to file for Ch 7.

So we file and fill out schedules i and j. At what point may we be forced back into a Ch 13?

Background: We were just dismissed from a Ch 13 after 4 years of paying on a 5 yr plan b/c lawyer told us we could keep $2400 twice from our tax refunds. Not true, and we couldn't make it up to the trustee in the amount of time we had left to get a modification.

We still have about $26,000 in unsecured debt, most of which has been sitting for the past 4+ years, so who knows what they will try to get us for now! The dismissal just happened a few months ago, and we haven't been approached yet by any creditors but I know it's coming. We saw a new attorney today and put down a retainer and started paperwork.

Bad news is about the same time as we were dismissed, husband was awarded $600/mo disability from the VA, so our income is higher than it used to be - although we are still below median, anyway.

I'm terrified we are now going to be forced back into ANOTHER Ch 13! I can't do it again. The last 4 years have been terrible...I don't know how they expected us to live on maybe $100 left over after I paid everybody else first every two weeks! The constant near panic almost killed me, and then to be dismissed through no fault of ours is infuriating.

How much money are we "allowed" after paying our bills/allowable expenses to still get a successful discharge in 7? Obviously we are going to have some since our income is higher. Where do they draw the line? I GUESS what I'm asking is what do our i and j schedules need to look like to have a judge feel we deserve a discharge in 7 vs. going to 13?

Obviously, if we have an "extra" $500/month, but $200,000 in debt, that would cut a 7. How do they decide when to tip the balance to 13?

I'm just trying to get some idea what we are dealing with.

[JackBondLove]

It seems to me that you could be forced back into a Chapter 13 if the trustee decides that your financial situation at the 341 meeting merits that. Once you are past the 341 meeting, you are done with any effects of your financial situation (with the exception of getting an inheritance.)

[keepmine]

The bk code specifies what the minimum MDI to fund a Chapter 13. The math gets complicated but it works out to about $187/month.
You really need to insist that your lawyer explain all of this to you.

http://doney.net/bkcode/11usc0707.htm

(A)

(i) In considering under paragraph (1) whether the granting of relief would be an abuse of the provisions of this chapter, the court shall presume abuse exists if the debtor's current monthly income reduced by the amounts determined under clauses (ii), (iii), and (iv), and multiplied by 60 is not less than the lesser of--

(I) 25 percent of the debtor's nonpriority unsecured claims in the case, or $6,000 [$6,575], whichever is greater; or

(II) $10,000 [$10,950].

(ii)

(I) The debtor's monthly expenses shall be the debtor's applicable monthly expense amounts specified under the National Standards and Local Standards, and the debtor's actual monthly expenses for the categories specified as Other Necessary Expenses issued by the Internal Revenue Service for the area in which the debtor resides, as in effect on the date of the order for relief, for the debtor, the dependents of the debtor, and the spouse of the debtor in a joint case, if the spouse is not otherwise a dependent. Such expenses shall include reasonably necessary health insurance, disability insurance, and health savings account expenses for the debtor, the spouse of the debtor, or the dependents of the debtor. Notwithstanding any other provision of this clause, the monthly expenses of the debtor shall not include any payments for debts. In addition, the debtor's monthly expenses shall include the debtor's reasonably necessary expenses incurred to maintain the safety of the debtor and the family of the debtor from family violence as identified under section 309 of the Family Violence Prevention and Services Act, or other applicable Federal law. The expenses included in the debtor's monthly expenses described in the preceding sentence shall be kept confidential by the court. In addition, if it is demonstrated that it is reasonable and necessary, the debtor's monthly expenses may also include an additional allowance for food and clothing of up to 5 percent of the food and clothing categories as specified by the National Standards issued by the Internal Revenue Service.

Court Cases: Deduction of "applicable" monthly expense for vehicle with no payments.


(II) In addition, the debtor's monthly expenses may include, if applicable, the continuation of actual expenses paid by the debtor that are reasonable and necessary for care and support of an elderly, chronically ill, or disabled household member or member of the debtor's immediate family (including parents, grandparents, siblings, children, and grandchildren of the debtor, the dependents of the debtor, and the spouse of the debtor in a joint case who is not a dependent) and who is unable to pay for such reasonable and necessary expenses.

(III) In addition, for a debtor eligible for chapter 13, the debtor's monthly expenses may include the actual administrative expenses of administering a chapter 13 plan for the district in which the debtor resides, up to an amount of 10 percent of the projected plan payments, as determined under schedules issued by the Executive Office for United States Trustees.

(IV) In addition, the debtor's monthly expenses may include the actual expenses for each dependent child less than 18 years of age, not to exceed $1,500 [$1,650] per year per child, to attend a private or public elementary or secondary school if the debtor provides documentation of such expenses and a detailed explanation of why such expenses are reasonable and necessary, and why such expenses are not already accounted for in the National Standards, Local Standards, or Other Necessary Expenses referred to in subclause (I).

(V) In addition, the debtor's monthly expenses may include an allowance for housing and utilities, in excess of the allowance specified by the Local Standards for housing and utilities issued by the Internal Revenue Service, based on the actual expenses for home energy costs if the debtor provides documentation of such actual expenses and demonstrates that such actual expenses are reasonable and necessary.

(iii) The debtor's average monthly payments on account of secured debts shall be calculated as the sum of--

(I) the total of all amounts scheduled as contractually due to secured creditors in each month of the 60 months following the date of the petition; and

(II) any additional payments to secured creditors necessary for the debtor, in filing a plan under chapter 13 of this title, to maintain possession of the debtor's primary residence, motor vehicle, or other property necessary for the support of the debtor and the debtor's dependents, that serves as collateral for secured debts;

divided by 60.

(iv) The debtor's expenses for payment of all priority claims (including priority child support and alimony claims) shall be calculated as the total amount of debts entitled to priority, divided by 60.

(B)

(i) In any proceeding brought under this subsection, the presumption of abuse may only be rebutted by demonstrating special circumstances, such as a serious medical condition or a call or order to active duty in the Armed Forces, to the extent such special circumstances that justify additional expenses or adjustments of current monthly income for which there is no reasonable alternative.

(ii) In order to establish special circumstances, the debtor shall be required to itemize each additional expense or adjustment of income and to provide--

(I) documentation for such expense or adjustment to income; and

(II) a detailed explanation of the special circumstances that make such expenses or adjustment to income necessary and reasonable.

(iii) The debtor shall attest under oath to the accuracy of any information provided to demonstrate that additional expenses or adjustments to income are required.

(iv) The presumption of abuse may only be rebutted if the additional expenses or adjustments to income referred to in clause (i) cause the product of the debtor's current monthly income reduced by the amounts determined under clauses (ii), (iii), and (iv) of subparagraph (A) when multiplied by 60 to be less than the lesser of--

(I) 25 percent of the debtor's nonpriority unsecured claims, or $6,000 [$6,000 (added by BAPCPA 10-17-05; not in 4-1-2007 adjustment)], whichever is greater; or

(II) $10,000 [$10,000 (added by BAPCPA 10-17-05; not in 4-1-2007 adjustment)].

(C) As part of the schedule of current income and expenditures required under section 521, the debtor shall include a statement of the debtor's current monthly income, and the calculations that determine whether a presumption arises under subparagraph (A)(i), that show how each such amount is calculated.

(D) Subparagraphs (A) through (C) shall not apply, and the court may not dismiss or convert a case based on any form of means testing, if the debtor is a disabled veteran (as defined in section 3741(1) of title 38), and the indebtedness occurred primarily during a period during which he or she was--

(i) on active duty (as defined in section 101(d)(1) of title 10); or

(ii) performing a homeland defense activity (as defined in section 901(1) of title 32).

[Morgon64]

Thank you. It's going to take me a while to read all that.

I suppose I should just think that anything is better than having to deal with all those creditors again, even if it's another 13.

Appreciate to info. Really.