What happens if your slightly over the means test for your state? forced into BK13?

[slvnomore]

gathering totals and paperwork for my bk lawyer meetings. What happens if your slightly over the means test for your state? are you forced into a chapter 13?

Forgive my ignorance on this subject:

1) What happens if your slightly over the means test for your state?
are you forced into a chapter 13? Which defeats the whole reason to go BK.

2) What if your self employed and some months your over
the means test and sometimes your not. You have no assets besides income.

3) What if you owe a bundle to the IRS but some months you make over the means amount some not.

4) What are some ways legally to still quallify? What are your options.

Thanks for your wisdom, tips, and constructive advice. ; )

[keepsmiling]

Are you in fact slightly over the means?
It's very easy to increase expenses. Buy some life insurance, buy a new car if you need one, decrease deductibles. Some people have taken out liens on their cars.
Let us know what happens at your interviews!

[murph996]

1) What happens if your slightly over the means test for your state?
are you forced into a chapter 13? Which defeats the whole reason to go BK.

You aren't forced to do anything. But if you need Bankruptcy protection and don't qualify for a 7, you have to file for 13. And, I take exception with your comment that a Chapter 13 defeats the whole reason to go into bankruptcy.

If you are just slightly over the means test, and have to go 13, depending on how much you owe, you will likely pay less than 100% to your unsecured creditors and if your income is below the median, you will pay 3 years, not the full 5. Your payment (If not in a 100% plan) will be based on your disposable income.

There are lots of benefits to a chapter 13 - even a 100% plan. 1. Interest stops on unsecured debt and creditors can't harass you. Depending on the nature of your debt, some creditors may not submit claims - and that debt will be wiped out upon completion of the plan.

No, it's not a 'fresh start' plan, but it is a valuable tool many here are using to clean up their financial situation.

[LadyInTheRed]

slvnomore, have you made any appoitments for consultations??? You can keep asking questions after you get the appointments made. Take that first step!!!!!!!

If any attorney tells you that you can't qualify for a 7 based only on the fact that your income is above median, politely thank them and end the meeting. Median income is only the first step. To calculate your median income, you take the average of your income in the 6 months prior to filing (If you were to file in May, that will be November through April), and multiply that average by 12. The trustee will probably want to see business records and your last 2 or 3 years of tax returns to confirm the income you use on Schedule I is reasonable.

Chapter 13 certainly does not defeat the whole reason for filing BK. Can you pay all of your dischargeable debt off in 5 years without BK? If not, Chap 13 is better than no BK. My chapter 13 payments are less than half what I was paying to unsecured creditors and includes the payment on a new car I bought 6 weeks before filing. My unsecured creditors will get practically nothing and my 2nd mortgage will be gone. It does give you a "fresh start", it's just takes 5 years to get there.

The best way to find out if you will qualify for a Chap 7 is to have an attorney look at the details of your situation and run the numbers for you.

[seagoat77]

Not much I can add to what has already been said other than my attorney said "You're slightly over the median, but I'm not concerned about that." I was able to, like many others, file a successful Chapter 7 - discharged yesterday.

[pamkev]

Can't add much either but we were slightly over the means test but our high heating bills in the winter took care of that. Filed a chapter 7 had to prove it to US TT about heating cost we sent in three years of heating cost. I like our lawyer at first then I wasn't to sure if we made the right choice. The good people on this board help me out with wrong ideas I had and to our lawyers credit she did a great job. We even sent her flowers at Christmas as a thank you.

Pam

[pamkev]

Not much I can add to what has already been said other than my attorney said "You're slightly over the median, but I'm not concerned about that." I was able to, like many others, file a successful Chapter 7 - discharged yesterday.

Great news on your discharge

[slvnomore]

I need to make ammends to all those who chapter 13 worked for. I was speaking only for myself. It was just such a shock after i finally had decided to see a BK att and have the relief of a chapter 7, then to find, when i ran the numbers, i may be slightly over and I may not even be able to do that! It was hard to even ask the question after that I felt so discouraged. didnt mean to step on any toes. I just wanted it to be clean and over, I have so many medical issues on my plate, and even the thought of several more years of this bk stuff of any chapter is exhausting. congrats on all who chapter 13 worked for and on your discharge.

[seagoat77]

Stop running the numbers - that's what you're hiring your attorney for! Whoever you meet with will tell you if you do or don't qualify for chapter 7 - and I'm betting you will. (And thanks, Pam!)

[bcohen]

I agree that filing Chapter 13 on only unsecured non-priority debts is a waste of money, and reducing income and/or increasing expenses to qualify for a Chapter 7 would be the smart thing to do. Chapter 13 is definitely a powerful tool, and there are circumstances when it is useful, such as for example to handle student loan debt, tax arrearages, mortgage arrearages, or loans which have a co-signer. But to throw good money after bad on old credit cards, medical bills, etc. is just plain insane.

I am glad that I filed for Chapter 7 when I did, rather than waiting until next year when I graduate from college, and then might be forced into a 13, depending on income.

[keepsmiling]

As a self employed person, your filing may be slightly more complicated. They will probably want you to have P and L's for instance.
OTOH.... as a self employed person, it should be fairly easy to manipulate your income to be below median.
So... stop worrying for just a little bit.

[slvnomore]

Thanks! ; ) good advice indeed !


so far I have prepared for my meeting:
Total Income
Total Debt,
List of Creditors
Totals cash All Accounts
Copies of latest bank statements
Total Assets ( General: including NADA)
Latest Credit Report
Tax returns for last 4 years.
Last settlement offer letter to CCs
copy of OC lawsuit filed, but Not served.

NEXT: monthly expenses. (Tips on easiest way to do this?)

Meanwhile I am up at 5am so this is what i found, it may be helpful to others.
as always, take what you like and leave the rest.


This link is for all states median income:

http://www.legalconsumer.com/bankruptcy/bankruptcy-means-test.php?ZIP=60654&ST=IL&CBSA=16980&FEDCT=ILN&CITY=CHICAGO&METRO=Chicago-Naperville-Joliet%2C+IL-IN-WI

Some interesting info on expenses:

http://www.nolo.com/legal-encyclopedia/expenses-help-pass-bankruptcys-means-test.html

http://www.debtfreecolorado.com/blog/2012/05/18/why-shouldnt-stop-at-income-determining-whether-qualify-for-chapter-7-bankruptcy-under-means-test/

[murph996]

[QUOTE=bcohen;600134]I agree that filing Chapter 13 on only unsecured non-priority debts is a waste of money

I think I get your point..for the OP, or anyone, if you can qualify for a Chapter 7, that is preferable to a 13. But, if you don't qualify for a 7, a 13 certainly is not a waste of money. And making that blanket statement may give some considering a 13 the wrong idea.

Take my case. I had 52k of unsecured debt. Claims came in at 32k (took out unsecured taxes). So immediately I am wiping out 32k in debt. On top of that, all interest stopped, and I had many high interest debts in there. I will be debt free in 5 years. Without bankruptcy, at best I would have managed to not get sued or garnished, but my debt would have been greater than the 52k. In addition, I am paying my 2nd in ful through the plan..Outside of bankruptcy, if I were able to keep up on payments Id have many years to go.

[keepsmiling]

Virtually no reason slv should wind up in a 13.
Somewhere.... someone who was self employed mentioned timing his filing so that there would be no accounts receivable at that moment, and no non-exempt cash anywhere.
As in everything in life, in the world of bk and particularly for those self employed-- timing is everything.

[keepsmiling]

Slv--- very often folks post their income and expenses here for us to critique. We have managed to keep any number of people out of 13's here. Remember that you are completely anonymous.
BUT... do let us know what the attys say. And remember, some of them are definitely better than others.