Probably a dumb question

[ledrums]

I am still in the beginnings of paperwork so forgive my lack of knowledge, but if you stop paying your creditcards and you can't put that on schedule J doesn't it make it look like you have more disposable income than you really do? If the debts weren't there we'd be sitting pretty. I'm confused!

[keepmine]

Debts you wish to discharge are not forward looking expenses.
If you have enough MDI, {I think it's $187/month} you may have to file a Chapter 13.

[ccsjoe]

keepmine is correct. Your DMI from schedules I vs J does not take into account payments on the debt you are discharging. See my previous answer to your other question regarding expenses.

[tcreegan]

Ch 13

Hi ledrums,

Schedule J is what you would have after the BK. Have you filled out Sched I yet? J minus I is your disposable monthly income (DMI) If it is large and positive you might be looking at a Ch13 instead of Ch7 I don't know what value of DMI is "large" enough, but hopefully some folks around here can chime in

Hang in there,

Tom in Colo

[ccsjoe]

Hi ledrums,

Schedule J is what you would have after the BK. Have you filled out Sched I yet? J minus I is your disposable monthly income (DMI) If it is large and positive you might be looking at a Ch13 instead of Ch7 I don't know what value of DMI is "large" enough, but hopefully some folks around here can chime in

Hang in there,

Tom in Colo

According to my attorney, anything over 150/month can be the trigger, although 187 seems to be the magic number. Remember, it's all trustee's discretion as well.

[SMinGA]

This is a general post, your situation may vary.

Most people, when still struggling to pay the credit cards, have a certain cycle. Make minimum payments, then since they're cash poor use the little bit of available credit (from the recent payments) to buy groceries, gas and such. And they skip buying some things that are actually needed. Put off car maintenance, put off home maintenance, avoid going to the doctor, and such.

Once you stop paying the cards - it seems to free up cash but in reality its cash you NEED but never had before. So you should start buying groceries, gas, etc. with cash (or debit, whatever works for you) and start doing the things you should have been doing all along. Routine oil changes, occasional hair cut, going to the doctor/dentist for routine matters. Buying occasional clothing supplies, replacing worn out shoes, getting a new pair of glasses that you really needed months ago. And etc.

Its important to figure out what your budget really should be on things that you avoided spending $ on before. As others have said - its a forward looking budget. You may even need to look into making changes on some of your bills. Had you increased your auto deductibles to the max to cut your monthly bill? May be time to change them back to $250-500. (Your lender probably requires $500 anyhow.) Do you have life insurance? If not, look into getting a policy. Not one that pays out $5mil, but I think the recommended is either 6 or 10x your annual salary?

Some things are not really spent each month but you need to allot money for them. Do you pay property taxes once a year? You need to save 1/12 of it each month and count that in your budget. You don't need car work each month (hopefully) but its not unreasonable to need 4 oil changes a year, tires & brake work every so often. Perhaps you even pay a tax/tag renewal each year on your vehicle. Estimate the total per year on those items, and set aside 1/12 each month for it. Then when those expenses come up, you'll be ready.

If ultimately you really do have cash available, after all reasonable bills & expenses, then you may be a ch. 13 candidate.

[tobee43]

Its important to figure out what your budget really should be on things that you avoided spending $ on before. As others have said - its a forward looking budget.

EXCELLENT advise ....and well stated by SM....we looked wonderful after we removed our cc payments on sch. j....yet, when we really looked carefully at the expenses we now needed to ADD back in....we were -2800.00!!! (however, UI was not included as income in our district)...otherwise we may have not done as well.

our situation was due to job loss and illness, however, i understand the "trap" people using their cards for gas, food, meds..etc....now if you add every single cent...you'd be shocked to see what actually comes out of your pocket monthly on the REAL NEEDS for your family.

[ccsjoe]

SM, that was exactly the trap we were in for over 2 years without realizing it. There was always the option of digging out next month. Then, in June, we thought we were pregnant and realized we had no health insurance, etc. That's when we decided it was enough!

[SMinGA]

We can skip some necessities here and there - but not consistently for the long run. We can postpone the oil change/tires for a few extra miles, let the kids wear the worn out jeans a little longer, etc. but eventually we need to take care of those things.

And sometimes, putting things off makes it more expensive ultimately. Get into an accident on bad tires, and you'll wish you had spent the money to replace the tires!

Of course, this does not mean we should start spending like there is no tomorrow. Making good financial decisions is still very important. I drive a lot. 600 miles/week is a low # for me, really! So one way I save is by buying used tires. I have a place I go to where they install 4 used but good quality tires for $100 flat. No extra fees, etc. They don't match - but who cares? This place will even do emergencies in the rain, despite having no covered garage area. New tires would last me only a little longer, and would be at least $200-250, when they factor in all the fees. And we stick to a budget for groceries, entertainment, etc. And weeks when money is extra tight (part of my income is variable, some weeks are better than others) then we have to be extra careful on the menu for the week & entertainment/extras are cut out.

And when there is money for 'extras' try to be creative. If you try, you can find great things to do (at home or out) that are not terribly expensive. One of our guilty pleasures is Netflix for $9 a month... And last week was a good $ week - Hubby took the kids to a minor league baseball game on Sunday. $25 for 4 tickets w/ a hotdog, drink and popcorn for each. Going to watch the Braves play would have cost more than 2x as much, and been a real hassle with Atlanta traffic.