Chapter 7 Income Limits in California?

[hjk4300]

My atty said I make too much money to go Chapter 7. But I'm confused because my take-home pay is still well under my monthly bills (by about $1000). Problem is, my wife used to make almost as much as I do, and her income was lost in May 2010. Reserves are dwindling, etc. With great income, we started a huge addition/remodel in 2009 by refinancing and borrowing. Now we're definitely going to lose it all.

Anyone understand these limits? The attorney was very short in his explanation. Our obligations exceed our ability to pay, no matter how you look at it. It hurts that I gross $10,500 per month, and can't make it, but that's the way it is.

Thanks for any enlightenment you can provide.

[biotechsolution]

You can't count any of your credit bills in your means test. So when you count your gross of 10,500 you can only count secured debts and utilities.

[momofthree]

You didn't provide much info so this is just a guess....you said you're going to "lose it all" seemingly in reference to your house. If you are losing your house thru foreclosure (or surrendering it), you most likely will not get to claim it (payment/insurance/taxes/maintenance) as an expense on your schedule J, which I'm guessing will free up a lot of your income.

[ccsjoe]

Objectively I'd say get a second or third or more opinion via free consultations. We are well over median, although we ended up qualifying for and filing CH7. The fact that you fail means test only means you can file CH7 with Presumption of Abuse, however the real tale comes down to your Schedules I and J. You can expect increased scrutiny, motions from the UST to have more time and reserve the right to dismiss your case, but bottom line if your Schedules I and J hold water and are the true picture, you have a good chance at getting a 7 discharge. Just find an attorney that you are comfortable with and that isn't afraid to fight for you. You may also want to take the online means test at nolo.com and perhaps complete your schedules I and J as practice to see what your numbers really are.

[tcreegan]

Hi hjk,

$5162/monthy is median income for CA You're coming in at $10500 difference = $5338
You are going to have to come up with $5338 of expenses to bring your income down to median.

It can be done....but you should be keeping an eye on a Ch 13 BK

Go here and get forms B22A (means test), B6I (income schedule), B6J (expense schedule)

http://www.uscourts.gov/FormsAndFees/Forms/BankruptcyForms.aspx

Go here to get the data you need for B22A (means test)

http://www.justice.gov/ust/eo/bapcpa/20101101/meanstesting.htm

Go here to find official comments on filling out the means test

http://www.justice.gov/ust/eo/bapcpa/docs/ch7_line_by_line.pdf

There is no line-by-line instructions for schedule J, you can write up a list of your expenses and folks around here will look them over for low/high areas and if something was forgotten

Good luck with this adventure...

Tom in Colo

[hjk4300]

Thanks to all!

Thank you all for the replies, they are helpful. In particular, I will follow the links provided by 'Tom in Colo' and see how the numbers work out. Good luck to everyone going through these difficult times - HK