How is a chapter 7 ever possible?

[ccposter]

I was set to file including having paid off the IRS and then was told I have to show expenses consuming all my income or I would be forced into chapter 13. I don't see how anyone could ever file a chapter 7 unless they were unemployed.

Supposedly even if you could pay $100 per month you would have to file a chapter 13.

[Medport]

That is weird. I wonder if you were over income on the means test. Either that or your state has some very strict laws. I'm fairly close to the max income for the means test, but have no trouble coming up with enough expenses to eat up my income, thus the main reason I'm thinking of filing...

[ccposter]

I am way below the mean, but would have $2000 per month in disposable income right now. I am just astounded that it took the eve of filing to find this out.

[SMinGA]

Good news - you are not bankrupt! Not if you have $2,000 a month in disposable income. Bankruptcy is not about avoiding your debts if you have means to pay them.

I am way below the mean, but would have $2000 per month in disposable income right now. I am just astounded that it took the eve of filing to find this out.

Perhaps you should examine if you really have $2,000/mo in DMI? Are you accounting for all reasonable & necessary expenses?

[newbie2]

I am way below the mean, but would have $2000 per month in disposable income right now. I am just astounded that it took the eve of filing to find this out.

If you are way below median income and still have $2000 a month in disposable income, you have a couple of issues. First, you are not computing your expenses correctly - all of your expenses. Second, you perhaps don't pay rent anywhere and haven't accounted for rent and utilities in expenses.

[researchnerd]

I am way below the mean, but would have $2000 per month in disposable income right now. I am just astounded that it took the eve of filing to find this out.

You have $2000/month left over after paying all your living expenses? Be sure to include mortgage, rent, utilities, car payments, insurance, taxes, clothing, groceries, household supplies, car & home maintenance, child care, health care, EVERYTHING.

If you truly do have this much left over, why are you filing BK?

[brokejoker]

It's not just mortgage/rent, car payment, and utilities. You also have to figure in groceries, clothing, pet expenses, hair cuts, car registration, insurance (health, home, and car), medical co-pays and co-insurance, pharmacy bills, household items (cleaners, paper towels, etc.), eating out, entertainment (renting a movie?), gas and maintenance for the car, phone bills...

The list goes on and on. If you truly have $2000 a month leftover then you will have to be in a chapter 13. I know we quit paying on our unsecured debt over a year ago and we thought "oh, we'll have so much leftover each month!" Nope, we have between $40-$50 at the end of the month after expenses. It helps to go to a cash only budget for a few months to really learn what you are spending.

[HMT]

It helps to go to a cash only budget for a few months to really learn what you are spending.

This is so true! Swiping that debit card is just too easy sometimes! Having real cash in your hands you think more about it. I don't know how many times I've gone into a store put a bunch of stuff in my cart and then just before I got to check out looked at what I was spending money on added it all up, left the cart and walked out.

Even grocery shopping I have a list, if it's not on the list it's not in the cart (sometimes to my detriment, forgetting toilet paper and then having to run back to the store before they close!) then I take a pen and write down the prices of the items I'm buying as they go in the cart then before I check out I add it up if I'm under budget we'll get a treat or I'll pocket the savings for next week. I get some looks when I bring out my calculator but I really don't care I know before my transaction how much I'm spending.

[justbroke]

Supposedly even if you could pay $100 per month you would have to file a chapter 13.

This is not true. The amount is exactly $182.50 a month before you may be pushed to a Chapter 13. In some cases, it can be as low as $109.58, but for most people with over $25K in unsecured debt, it's $182.50/month.

You also need to remember that the amount is calculated as disposable monthly income. This is your residual income after you pay all expenses, such as food, grooming, medical, medicine, clothing, housing, heat, electricity, vehicle payments, vehicle maintenance and operating costs, etc. Many people would LOVE to have $100 left over after paying all their necessary expenses!

[Medport]

I wonder how they figure the disposable limit of $182.50 or whatever the exact amount is? I mean I could be over by as much as $300, but that is only if I work at least 2 days at my PRN job (which is not guaranteed) and pick up a couple OT hours at my main job. Most months I usually work 2 days at my 2nd job. Although I was planning on using that extra income to start paying down my home equity loan (which I've only been paying interest on for the past 6 years) and getting a cheap health insurance plan. Would these be acceptable expenses even though I have'nt started paying them yet because I obviously did'nt have the cash to do so?

[ccposter]

acceptable expenses

Would these be acceptable expenses even though I have'nt started paying them yet because I obviously did'nt have the cash to do so?

Just guessing, but I think they would be allowable if you can show you are already paying them. It seems a lot of this goes on what the local custom is and what will fly with the local court trustee. I was under the understanding that any cash above $400 is forfeited, but my lawyer says you can keep 75% of up to $7500, apparently what is typical for this court. I am not sure I am getting the right advice, but no one seems to know for sure how all this works, and I just learned I would be forced into Chapter 13 which I am not going to do, since I have problems keeping a job and in fact have been declared developmentally disabled by the state and county, though I don't think that would have any affect as far as a bk, at least this lawyer doesn't think so. To declare Chapter 7 I would have to be unemployed again.

[justbroke]

I wonder how they figure the disposable limit of $182.50 or whatever the exact amount is?

It's in the law. Look in 11 USC 707(b)(2)(A) which sets the limits. This is part of the Means Testing added by the BAPCPA amendments in 2005. The amounts change every 3 years by power of 11 USC 104.

I mean I could be over by as much as $300, but that is only if I work at least 2 days at my PRN job (which is not guaranteed) and pick up a couple OT hours at my main job. Most months I usually work 2 days at my 2nd job. Although I was planning on using that extra income to start paying down my home equity loan (which I've only been paying interest on for the past 6 years) and getting a cheap health insurance plan. Would these be acceptable expenses even though I have'nt started paying them yet because I obviously did'nt have the cash to do so?

Paying down any loan, outside the payment that is listed in your Credit or Installment agreement is not a valid expense. The health insurance plan would be acceptable.