"Debtor could reasonably be expected to reduce living expenses"

[alorth]

The more I look into filing a debtor's Rebuttal of the Presumption of Abuse, the more discouraged I get.

Apparently, the rebuttal is limited to some things called "Special Circumstances", which the Gov't. mainly limits to either a Major Health Issue, or Call to Active Military Duty. I don't know if my Health Issue would qualify, but especially since my wife's income is still there, and is still substantial, and is still almost 2x median.

One answer I read in Case Law was "Debtor could reasonably be expected to reduce living expenses" in the case where a high mortgage payment was limiting the ability to formulate a re-payment plan under 13. The petitioners had offered the high mortgage payment as necessary and a "special circumstance", which the judge denied (this was in Texas).

So am I to assume the UST and Judge will just determine the Totality of Circumstance is such that we should be expected to reduce our living expenses, but that they don't care if its really possible, or HOW it should happen, just that it should happen?!

Nice mess.

[IamOld]

Do you think you'll be challenged? Does your atty think so????

And what I still don't understand is this - ok so you move out of the house right? So you can pay back creditors thru a 13 - BUT doesn't that mean that the SECURED creditor of your house get screwed (so to speak???)

[AngelinaCatHub]

Being totally objective, your wife makes good money, but you cannot pay your bills. Are you current on the mortgage? Why are you filing for BK? You can't pay your bills due to not enough money. What besides your obligations and/or utilities is eating your income up? This is what the UST is asking. The presumption of abuse is triggered by numbers only. As looking into what little info you have supplied, I am looking as if I was a UST and asking this question. SO, you must come up with a satisfactory answer to explain the no money part.

Don't misunderstand, I'm on your side, but projecting this puzzle as the Trustee may see it. 'Hub

[HHM]

Are you saying you are 2 times median income, or your mortgage is 2 times the IRS allowed expense.

If the prior, then 2 times median income is a BIG PROBLEM, no way you are doing chapter 7. You may have some special issues, but still, something is way amiss on your budget. I don't know that BK is your option, you may be more of a Dave Ramsey Total Money Makeover solution.

[AngelinaCatHub]

Are you saying you are 2 times median income, or your mortgage is 2 times the IRS allowed expense.

If the prior, then 2 times median income is a BIG PROBLEM, no way you are doing chapter 7. You may have some special issues, but still, something is way amiss on your budget. I don't know that BK is your option, you may be more of a Dave Ramsey Total Money Makeover solution.

That is what I was getting at, but you said it better. Dave Ramsey is good. However when you have no job or a fixed income, sometimes BK is the only solution. DR sees no reason at all to BK and I disagree with that. There are more reasons for BK than just financial relief. For some a new start is a new life, and can save a marriage and sanity at times. 'Hub

[alorth]

Medical expenses are high. We blow right through the $2600 cap on our Health Spending Account in 7-8 months....the rest is out of pocket. Preschool/Daycare costs for our 4 yr. old are around $570/month....AND I am watching her most of the time myself....but she does have pre-school 5 days/week at Montessori. So the out of pocket health costs plus the child's school/care costs are 2 big hits we take. Then add the Mortgage of $2410. Payroll taxes eat over $2200/month. Car payments are 210 and 270 for an '09 Hyundai and an '05 Chrysler. There is 401k loan payback of around $400. Car insurance has gone up thanks to bad credit. It all adds up, folks. Grocery and gas expenditures have increased simply as a by-product of the economy. People...I still wear some clothes that are 10-15 years old! We still watch old tube-style TVs in our home, except for one 5 yr. old flat screen. No boat, no 3rd car, no vacations, no motorcycle, no jewelry. We keep getting odds and ends repairs on the cars, or the house. I don't even have a cheap swingset for my kid in the backyard...something I have desperately wanted to get for her. I'm not talking one of those big Wooden $2500 Play structures, either. Just a cheap, plain swing set. Its just life....eating us a small bite at a time.

(edit to say: This doesn't take into account utility costs, either, which have also been going up)

(edit again to say our monthly obligations on the Means Test total close to $9200/month.....Our Means test initially showed income of $9360....that was an error and it is actually at about $9950....that is all the difference it took to go from the possibility of a 7 into a 13)

[alorth]

Are you saying you are 2 times median income, or your mortgage is 2 times the IRS allowed expense.

If the prior, then 2 times median income is a BIG PROBLEM, no way you are doing chapter 7. You may have some special issues, but still, something is way amiss on your budget. I don't know that BK is your option, you may be more of a Dave Ramsey Total Money Makeover solution.

We actually came VERY close to a Chapter 7 with an INCOME 2x median.

The Means Test was initially passed under the "Disposable Income was less than $190/month and repayment under a 13 would be less than 25% of debt".

BUT....a mathematical error was just discovered in the test that now has us slightly OVER that mark, and it does look like we will need to convert to a 13. The YTD totals on the checkstubs didn't match the totals if you added each checkstub individually!

The difference was roughly $600/month. OR....essentially, ONE check somehow didn't make it on the accumulative total over the 6 month YTD figure. It made all the difference between a 7 and a 13.

So any chance of a 7 is out the window, and we aren't going to fight the Pres. of Abuse....especially seeing the error is on our end.

But it was soooo close.

Now we have to figure out how a 13 plan will work.

[HHM]

I understand that, but keep in mind, it doesn't take much for the US trustee to object to certain expenses to get you back into chapter 13 territory.

All I am saying, is that you need a mind set that you are "probably" a 13, but if you can get a 7 great.

[alorth]

I understand that, but keep in mind, it doesn't take much for the US trustee to object to certain expenses to get you back into chapter 13 territory.

All I am saying, is that you need a mind set that you are "probably" a 13, but if you can get a 7 great.

I may not have explained my self correctly the last few posts...sorry for any misunderstanding.

But we ARE now in CH 13 territory.

There was a mathematical error on the Means Test which put us slightly OVER and into "Abuse" territory, where as before we found the error, we were thinking that we were going to be able to squeak by into a 7....barely.

I'm still not sure what a 13 re-payment plan is going to look like, as I just don't see where the Disposable Income is in reality.

AND I'm pretty sure the plan will fail unless its done with enough room to live OK the next 5 years.

That's what I think is most upsetting about having to do a 13 instead of a 7. I relate it to being convicted of a Felony as opposed to a Misdemeanor. You spend a whole heckuva lot more time in "BK Jail" with your entire financial life handed over to some TT.....5 years!! I could conceivably die before its over. Its a long time.

[AngelinaCatHub]

I don't wish you to misunderstand my post. I wish you well. You are new but yet you have read many, many worse situations. I posit that you might consider how fortunate that you are.

I/we in 2000 were worth 10 mil in land and money. As per our age and no progeny (together) we passed our land to the State for a Park (with life estate). This was fortunate in that an enemy serially sued without going to trial until we were broke. It was the BEST DAMNED THING TO HAPPEN TO US. Why? We learned different values. After a quarter mil in lawyers fees we fell through BK and did EVERYTHING wrong. We were blessed as our ignorance showed and we paid all penalties.

Here is what I see in this post and understand, it is only an attempt to make you see the glass is half full for you, not half empty.

Medical expenses are high. We blow right through the $2600 cap on our Health Spending Account in 7-8 months....the rest is out of pocket. You are fortunate to be able to save against an HSA. I assume you have medical insurance though. Preschool/Daycare costs for our 4 yr. old are around $570/month....AND I am watching her most of the time myself....but she does have pre-school 5 days/week at Montessori. So the out of pocket health costs plus the child's school/care costs are 2 big hits we take. That is a heavy hit. I was fortunate to have a stay at home wife (former) to raise my two children. Then add the Mortgage of $2410. IMO you are needing a smaller house. Payroll taxes eat over $2200/month. Car payments are 210 and 270 for an '09 Hyundai and an '05 Chrysler. There is 401k loan payback of around $400. You were over extended when you had to hit your retirement. Did you realize to cut back at that time? Car insurance has gone up thanks to bad credit. It all adds up, folks. Grocery and gas expenditures have increased simply as a by-product of the economy. AND it will get much worse in the near future. Cut back all you can now. People...I still wear some clothes that are 10-15 years old! We still watch old tube-style TVs in our home, except for one 5 yr. old flat screen. We pick them up on garbage day and donate perfectly working tube TVs to poorer folks. No boat, no 3rd car, no vacations, no motorcycle, no jewelry. We keep getting odds and ends repairs on the cars, or the house. Normal repairs is called maintenance and everyone has this. I don't even have a cheap swingset for my kid in the backyard...something I have desperately wanted to get for her. I'm not talking one of those big Wooden $2500 Play structures, either. Just a cheap, plain swing set. Its just life....eating us a small bite at a time. You can build such a thing yourself out of scrap lumber or junk. I did this years ago. Just spend time with your little girl, she will not miss a swing set, but she will remember your attention. Also the comment about life. Life is a trip. Enjoy the ride. You pick your day every day. Choose to be pleased with a good day. If you choose to be depressed, you won't be disappointed when you are.

(edit to say: This doesn't take into account utility costs, either, which have also been going up) Everything is going up but wages. We now are on SS and what we can do with a bit of consulting. We live better with less. You will do the same, just accept this. You are better off than most here.

(edit again to say our monthly obligations on the Means Test total close to $9200/month.....Our Means test initially showed income of $9360....that was an error and it is actually at about $9950....that is all the difference it took to go from the possibility of a 7 into a 13) My gosh, what you make in two months is now my gross for the year. If I did not have a paid house, I'd be under a bridge. Be thankful you can do a 13. You have a budget problem and could solve your problem in 13. Do the time and get it behind you.

My friend, I remind you of my above disclaimer, but you are blessed far above most here. I wish you well and keep us informed. My personal advise is live a simpler (less expensive) lifestyle. 'Hub

[alorth]

We are seriously TRYING to get to that simpler life by wiping the slate clean. That's why were in BK. And we have already begun the simplification in so many areas. If you could see the sofa I'm sitting on, with tears in the fabric, you would have trouble telling me I live an "expensive lifestyle".

I would ask you to keep in mind that we accept responsibility for most of our situation. But I refuse to take it for all of it. The same Banks that were all too happy to extend us credit well in excess of $200k a couple years ago, decided to all raise their interest rates, minimum payments, and eliminate any available credit at once. Our jobs didn't change. Our income didn't change. We had always been on time with payments. But THEY changed our situation for us. Yes, we were overextended, but they gave us the rope and let us hang ourselves with it, before dropping the trap door themselves.

I know we are blessed because my wife continues to have a great job and income, more than so many here. BUT we are drowning in debt. We over extended when things were good, thinking we'd always have access to credit, thinking we could always sell our home and get out from under, thinking we'd both be working well into our 60's or later, as we are only in our 40's now! Then all of sudden all of our options were taken away.

I mean, a $300,000 house is NOT crazy! We live in 2200 sq. ft. on an acre. Not a McMansion. There is an entire neighborhood of $500k plus homes, and million dollar lakefront homes, all over the place near here. We THOUGHT at the time of purchase that we were being responsible with this house, instead of spending more, which was entirely possible. My wife is a Doctor, and I suppose we felt that we had 'made it', and 'deserved' a bigger home, and nice cars (which we used to drive, but that was long ago, part of our 'simplification'). We used to take vacations, had a timeshare, had a boat, etc. etc. We have sold it all. A long time ago now.

We haven't touched a credit card in over a year.

I would live in a smaller house now. I really don't care, give me a 60 yr. old 1400 sq. ft. 3 bedroom ranch. But we are underwater here in the house we have. The rental market for anything decent is fairly slim. And of course, renting, instead of buying, will also affect our deductions at tax time.

We can survive fine the way things are now if we could just get a 7, and discharge all of the unsecured debt that was accrued. But apparently, THE MAN is not going to let that be an option for us.

So its a 5 year SENTENCE in Ch. 13 that awaits us. When you don't have financial control of your life....when you surrender it to another, then you truly are NOT free. May as well be a prison....maybe a Velvet Prison, but a prison just the same in the restrictions that you face.

So this may sound like "woe is me, or us".

Fine.

I am frustrated beyond belief to find ourselves in this situation. We saw it coming, we tried so many different things to head it off. We sold off everything. We refi'd to pay off bills. We took 401k loans to pay off bills. We got financial counseling that couldn't help us. We stopped the spending. NOTHING got us to where we needed to be, and then other circumstances in regards to my health and ability to earn a good income have hit us as well since then.

I wish in a way we could just get up in front of the UST and Judge and tell our whole story. Just get it off our chests, instead of following all of this 'procedure'. Then let them make their decision based on the whole picture.

[momofthree]

Are you working Alorth? I ask because you said you mostly watch your daughter, but she goes to preschool. I'm not sure that a nearly $600/mo preschool payment is going to fly with a ch.13 trustee if you're not working. Just a head's up. ;)

[AngelinaCatHub]

alorth as to post 11: I do understand. Been there and done that but the bank did not take us down. I had an enemy who bled me financially. Would have lost it all and he tried to break our gift of our heritage that we gave to the State for a Park. They paid us a tenth (they cannot take a gift) of it's value we put into a CRUT so that was safe in suit. This was before the jerk hit me. Long and booring story.

I don't judge you. Things could go worse and probably will. You can convert to a 7 if and when.

When we built our house, Mrs. and I only wanted a cottage. We have/had 266 acres, 22 on the river. We built a 600 sq ft cottage. It is all we needed. We have a little house but a very nice yard. Wooded and paid for. We pay no taxes on our Park that was built free and we have life rights others do not have and a life estate on our 22 acres.

None the less, we lived high and could drop a hundred without missing it. No more. We now cut coupons and the like. We gained much more than we lost in values and what wealth really is. Wealth is not money or the lack of it. It is peace, health, and contentment. It is work to maintain those things though. You choose daily your day and it's success. Happiness is a state of mind. Choose to be. 'Hub

[Flamingo]

I may not have explained my self correctly the last few posts...sorry for any misunderstanding.

But we ARE now in CH 13 territory.

There was a mathematical error on the Means Test which put us slightly OVER and into "Abuse" territory, where as before we found the error, we were thinking that we were going to be able to squeak by into a 7....barely.

I'm still not sure what a 13 re-payment plan is going to look like, as I just don't see where the Disposable Income is in reality.

AND I'm pretty sure the plan will fail unless its done with enough room to live OK the next 5 years.

That's what I think is most upsetting about having to do a 13 instead of a 7. I relate it to being convicted of a Felony as opposed to a Misdemeanor. You spend a whole heckuva lot more time in "BK Jail" with your entire financial life handed over to some TT.....5 years!! I could conceivably die before its over. Its a long time.

The reason most Chapter 13s fail is because the debtors cannot change their former lifestyle or refuse to do so. After having lost a high yearly income with the loss of my husband's job in 2/01 and not being able to recover to reach a similar income and having to learn to adjust to a completely different lifestyle, I know how hard it is to do. However, a Chapter 13 will teach you the budgeting skills you will need to learn to get through the remainder of your life and not get into similar situations in the future of living above your means in case something bad happens (job loss, medical emergency, etc.). It's hard to learn to cut back and budget and not be able to go out and do things one did previously - our vacations became back yard vacations and we learned to barter to get house repairs done or car repairs. We saved change out of our pockets each day to be able to purchase Christmas gifts, birthday presents, etc. We never had to do that previously and it was an eye opening, big learning experience that now keeps us, 10 years later, from ever getting in that position again. We got through the Plan years and came out fine - you can too...and will learn so much about yourself and your finances in the process...

[alorth]

Are you working Alorth? I ask because you said you mostly watch your daughter, but she goes to preschool. I'm not sure that a nearly $600/mo preschool payment is going to fly with a ch.13 trustee if you're not working. Just a head's up. ;)

I'm not either. It could be a point of contention. She only spends 3 hours/day 5 days/wk there, but I feel she is learning so much more than I could give to her on my own. I do take care of her myself the rest of the time. Montessori schools are known to be high cost...and I can hear the UST or Judge saying we 'just can't afford it' now that we're in BK. maybe they're right, but I do feel its in the best interest of my daughter, and intend to fight for it.