Does anyone not ever qualify for Ch 13?

[Freddy03]

I'm really hoping we qualify for Ch 7 and are able to keep the house and 2 cars but if we don't well be doing Ch 13.

My question is what are some of the reason people do not qualify either 7 or 13?

Thanks

[WhattaMess]

Unless it is a case of fraud or abuse, I would think anyone could qualify for, at worst, a 100% payback 3 year plan.

[Dougie011]

I think the main thing is your DMI. If you have none, I would think a chapter 7 would be what your after. 13 you will have some money going to creditors and will need DMI to pay them. If you have A LOT of money left over, I don't think someone would be filing for bankruptcy. I don't know specifics, so someone wiser then me will need to fill in all of the things I missed.

[Freddy03]

DMI: Disposable Monthly Income (Right)?

We are over the median level (about 3K). I did the means test online and it said we still passed, but I'm not sure I did it correctly.

I did a budget yesterday after calculating - food, gas, tolls, medical expenses, bills, etc. and we did have about $400 left over for the month.

We have about $45K in debt and make about $75k total a year.

[ccsjoe]

Freddy03,

We are above median 15K, however we do pass means test and have a positive DMI from schedule J of approx. $79/month.

Regarding the means test, make sure you use the IRS figures where required and other variable figure allowable of income and expenses use an average of your last 6 months. For schedules I & J use present and forward looking, no IRS figures anymore. For example, in my case, I am adding as an expense on J how much I will be spending monthly on a home monitoring security system (e.g. ADT) now that I have some available cash flow, and I am prepared to show the trustee that although not a past expense, I entered into a contract, thus a current/future expense.

If your DMI is above $180 you will most likely be moved into a 13, so look over your current and future numbers very carefully and don't shortchange your expenses.

[Freddy03]

Thanks -

I did the means test and I was a little confused (no surprise there).

On block 42 do I list my mortgage and car payments?

[ccsjoe]

Yes, that's where we listed ours.

[Freddy03]

Ok so I listed it - the normal monthly payment and stated we passed the means test.

So does that mean we could do Chp 7?

I'm just so concerned on keeping the house and both cars (one paid for and the other on payments).

We don't have much assets. Just normal household stuff. One big tv but nothing really else.

After we file. I could safely pay for the house, car and other non secure bills. We do have a HELOC that we could afford too.

[ccsjoe]

Freddy, Is your mortgage payment higher or lower than the IRS standard allowed for your area? If your payment is actually higher, you will need to probable speak with an attorney. The trustee can disallow the excess in the exemption. I am going to face the same issue with my car payments. I pay 520/month, IRS standard says 496. Trustee can challenge the excess 24.

Next thing you want to look at is exemptions. These can either be federal or state. The state of residence will determine which exemption rules you have to abide by to protect your assets. I happen to live in California which has rather generous exemptions, so all our assets are exempt. Your exemption rules will give you the amount for car. You will need to pull a KBB private party valuation.

[momofthree]

Freddy, Is your mortgage payment higher or lower than the IRS standard allowed for your area? If your payment is actually higher, you will need to probable speak with an attorney. The trustee can disallow the excess in the exemption.

This information is incorrect. The trustee cannot object to the higher mortgage payment. He can only object to rent over the allowable figure, NOT a mortgage payment.

[Freddy03]

My mortgage is $505 over the IRS limit for rent/mortgage.

But on line 42 do I list the whole mortgage payment or just the difference?

[ccsjoe]

freddy, You list the whole mortgage.

momofthree, thank you for correcting me.

[LadyInTheRed]

I did a budget yesterday after calculating - food, gas, tolls, medical expenses, bills, etc. and we did have about $400 left over for the month.

Are you sure you are including everything? Don't forget auto and home repair and maintenance, auto registration, clothing, entertainment. There have been some posts on here with good lists of expenses that can help make sure you aren't forgetting anything.

[Freddy03]

Are you sure you are including everything? Don't forget auto and home repair and maintenance, auto registration, clothing, entertainment. There have been some posts on here with good lists of expenses that can help make sure you aren't forgetting anything.

No I didn't include repair or registration stuff. What should be my goal to get the lowest DMI possible?

Thanks

[ccsjoe]

In a nutshell, yes, lowest DMI posible legitimately.