means test is a joke

[gak555]

At least it seems that way to me. If you make just 3-4,000 more than the median income and go through the means test using IRS/Census limits on expenses I would guess a very tiny percentage of people are able to qualify for chapter 7.

Maybe I am reading it wrong because I am somewhat math challenged, but are there many folks out there that have had favorable success utilizing the means test to qualify for chapter 7 instead of having to go through chapter 13 in situations where their income was above the state median ?

[SinkingFast]

Well,............... If we file one way, with 5 people, we are about $1K over the Median. If we file another way, with 6 people, we are well under the Median.

Mom lives with us. Depending on the attny and/or whether or not the Court will allow her as a dependent for us kinda determines the route we go. Also, an attny said Mom's finances will have to be disclosed as part of our filing, if we include her. She'll have to produce bank statements showing her Soc Sec income and expenses to verify that she does not contribute to the household income. Not that we have anything to hide, but Mom is not thrilled about that. The BK is our problem and they may want her info??!! That's how she sees it.

So, I've figured the Means Test based on a family of 5. Being slightly over the Median in income. I came out at $115/month disposable income. But I didn't include the Trustee's Admin Fee for a Ch 13 plan. I don't know how to figure it. I know the %, but what do I multiply that % against??!! One attny I told that to muttered under his breath, the Trustee's fee would eat up the $115/month. Even at $115/month, that won't even come close to paying back 25% of our debt.

So, I think you're partly right. There's probably some line there in income, above the Median, that people can earn and still qualify.

But it's also dependent on the debt level.

A person with $100/month of disposable income could have up to $24,000 in unsecured debt and qualify for Ch 13. If that person had $25,000 in unsecured debt, they wouldn't qualify for Ch 13 under the 25% repayment rule.

If the disposable income level reaches the "magic" $166/month, a person could have to have up to $39,840 of debt and still qualify for a Ch 13 plan repayment.

Each $1K extra in income per year adds $83.33/month in income. So an extra $2000/year adds $166.66/month in income. And so on.

Now you gotta consider individual variables as well. Medicals expenses, cell phone bills, other secured or priority debts payments that people may make. A divorced person with alimony and child support payments will have more "wiggle" room than someone with comparable income without those payments. You might be able to stretch up to $3K or $4K, maybe more, over the Median.

It definitely goes beyond the Median. It's gonna depend on the individual's personal sitation and their total debt level as well.

[annikasaunt]

Thank goodness that CT has one of, if not the highest, median incomes in the US. I think it's over $50,000. So I lucked out (if you could call this entire thing lucky). Definately not even close to that.

I do have the best atty ever tho. He worked with me personally last night for 3 1/2 hours to get all my numbers in order so that they would work for the trustee! He is amazing. I have never been so impressed with any professional in my life. He always takes the time to answer every single question, no matter how small or stupid you think it is. He makes you practice your answers by him being the trustee! He says that if you are prepared and have everything in order you won't have any trouble with the trustee. I know that there are alot of schmucks out there and I'm glad I didn't end up with one of those! Just had to give a little praise for my guy!

[13inOR]

In our case, our daughter was 19, a college student still living at home, but
also employed when we filed. That made 4 total in our family.
Our attorney said we could get by counting her into our grocery bill, but that was it. They didnt ask about or include her income, but they also wouldnt let us base anything on a family of 4 , because she was an adult with her own job.
Other than the groceries, which our attorney maxed out as much as she thought would be allowed, her expenses nor her income was counted into our household budget when they figured our disposable income.