Can you pass a chapter 7 means test only to find out you don't qualify?

[merime]

My lawyer was not confident that I could pass means test in NC since husband makes $84,000. I just got a message that I passed and could now pay the $500 retainer. Has anyone been told this only to be told later it is not possible? Thanks again everyone.

[angles]

There are two tests you have to pass, the first one is the means test (congrads on that hurdle BTW), and the second is the DMI after working your financials. At this point it sounds like the attorney believes you can file and wants to move forward. Talk to him about your questions before paying the retainer to make sure you understand what will happen next. If you don’t feel confident in this attorney get advice from another.

[merime]

What is DMI? Thanks! I have to question lawyers motives. He was so slow to do the means and then suddenly is assistant is saying I passed ( he has had my info for a month), and hurry in for retainining fee as his busy season is coming up?? Thanks for words of wisdom!!

[JEM]

What is DMI? Thanks! I have to question lawyers motives. He was so slow to do the means and then suddenly is assistant is saying I passed ( he has had my info for a month), and hurry in for retainining fee as his busy season is coming up?? Thanks for words of wisdom!!

I will say that I've always heard that tax refund time is busier for law firms because people tend to use refunds for attorney fees. So they probably were being truthful in that.

[HHM]

There are other ways to not qualify for chapter 7.

Unless the attorney had 6 months of pay stubs and your full financial disclosure, there is no way that attorney did a means test. In fact, I am surprised you found an attorney willing to do it without being paid.

[merime]

He did have 6 months of paystubs and all our info. When I went to his office he said he would be surprised of I passed. I don't make much (710 month), no car / joint house, but legally my husband makes $85,000 which I am pretty sure is an auto fail. I don't know what to think anymore. Head is always going. Thanks for helping me figure this all out!

[needhelpinnj]

I've also been wondering the same thing. I am getting ready to file for bankruptcy. I had three lawyers complete the means test for me (free of charge) and I qualified for Chapter 7. I live in NJ and make $105K per year. At first glance, I make too much money. However, I have a mortgage payment of $4K per month for my house with Bank of America. It's my only debt. Long story, but I got into a bad mortgage that I can't afford and I don't want the house. My mortgage payment is 65% of my take home pay after I pay all the taxes. My house is $100K underwater. I've tried to work with BofA (Deed in Lieu, Short Sale, Naca) and they told me each time it's my problem and I should get a second job or find more money.

I had a baby on November 14th and can't afford the payment anymore with daycare, formula, diapers, doctors bills (I had $1000 of doctors bills the first five weeks). All three lawyers said I easily qualify for Chapter 7. However, I'm scared that I won't. The lawyer I chose has been a bankruptcy lawyer in NJ since 1976 and she is fabulous. She has reassured me many times that I will. I also consulted with a guy who has been a bankruptcy lawyer for 20 years and a former trustee and he said that I would easily qualify for Chapter 7.

Any insight or experiences would be very appreciated!

[AngelinaCat]

DMI = Disposable Monthly Income. This is what is left after all bills have been paid.

[clevelandmom]

Hi Merime! There is a difference between being "over median" and passing the Means Test. Is it possible you may have confused the two? Being over median simply means that you make too much money to automatically qualify for a Ch. 7, so you then have to take the Means Test. The Means Test is taking all of your income and subtracting all of your bills (that are allowable by IRS standards), and coming up with your "DMI" (disposable monthly income) at the end of the month. This is "extra" money that you have left over, after paying all your bills and putting food on the table. The rule is if you have over $187 (and change) of DMI, then you should be able to pay your creditors. So even though your husband makes $84,000 a year, it sounds like you may have enough bills to make what's left over at the end of the month so low that you simply can't afford to pay your creditors anymore. (Does that help?)

[csonly]

Needhelpinnj - You can still pass the means test and be over median. If you feel you have a competent lawyer that says you could file a 7, then I would do that. Just be prepared to justify your expenses and also be prepared for being over the median to raise a flag to the UST of presumption of abuse, but this does not in any way mean that you are abusing, the fact that you are over median makes them look at things much closer. This was my experience. As far as your house payment, that is crazy, I would go with the 7 to get that discharged, so you live more comfortably without being trapped in that high mortgage and be able to enjoy your new baby without that hanging over your head. Actually my daycare for 2 kids, is more than my mortgage payment w/o escrow, so I'm sure that in itself has added heavily to your financial load.

[needhelpinnj]

Thanks for your insight csonly. Yes, the mortgage payment is crazy! I regret getting into this mortgage, but now I want to move on with my life. I guess my credit score will take a big hit (it's 830 now) and I have no other debt. No credit card bills. With this mortgage and limited disposable income over the past six years, it feels like I've been in bankruptcy!

I feel very good about my lawyer and that two other lawyers told me that I would pass. I plan on filing after I have my income taxes done next week.

Thanks for your support! I appreciate it.

[merime]

Yes, that does help. It helps a lot!! Thank you!

[kornellred]

It would be interesting to know how many filers who are under their state's median income do not qualify for Chapter 7 versus filers who are over the median income and do not qualify for Chapter 13. I would imagine that the latter case would be much harder to justify.