totality of circumstances?

[xraya]

After some number crunching, I have figured out that my previous 6 months of income falls under the state median income. However, I've read that since MA is an affluent state, the "totality of circumstances" test could be applied to see if I could possibly fund a 13. I used a couple of online calculators and I have between $300 and $700 of disposable income after everything is said and done. So am I pretty much screwed and will end up in a 13?

If I do end up in a 13 and I get married and have a child in the next year (our current plans) how will this affect the Chp 13 plan? Would I be able to go back and adjust it based on the increased expenses of having a larger household? I make almost twice what my fiance makes so I don't think his income would affect things much. I'm more concerned about the increased expenses of having a new baby.

[keepsmiling]

Yes you could wind up in a 13 if you are under median.
If you post your numbers, folks here are pretty good about figuring how to list your expenses so as to reduce disposable income. Some even buy a car so as to get into a 7 instead.
In the event that you have a baby or other circumstances change, you can usually amend your plan.

[SMinGA2]

Assess your budget. Are you considering reasonable and realistic amounts, going forward, for things like groceries, personal care, home maintenance, car maintenance, clothing, medical out of pocket, etc.? Do you have reasonable insurance? That would include reasonable deductibles on auto, but also health, life?

Are you contributing to 401k? If not, does your employer match? If they match - when is the next open enrollment for you to start contributing enough to get the maximum employer match?

[xraya]

Okay, number crunching time...

Average monthly income $4032.60
Taxes (25% bracket) $1008.15
Insurance (health, dental, vision) $394.33
Net Take home Pay $2630.12

Expenses
Rent $374.00 (includes heat, hot water, cable)
Electricity $50 (this is the 12 month average from last year)
Cell Phone $150
Home Maintenance $29
Food $300 (I actually spent more than this last month)
Clothing $65
Laundry $40 (laundromat)
Medical $60
Transportation $278
Recreation $100
Auto Insurance $66
Disability Insurance $45
Car payment $439 (2 years left on the note)
Professional dues/education $23

So a grand total of $2018 for expenses, leaving $612 per month that could fund a chapter 13. I was contributing to a 403b and could start contributing again. My employer matches, but I'm not sure what percentage they go up to. Would increasing my withholding help at all? Unless there's something I'm missing, I'm pretty sure I will going the chapter 13 route.

[keepsmiling]

OMG.
Where the heck do you live that you pay such low rent?
That would buy NOTHING, nowhere, not even a room in a share anywhere in NJ.
Perhaps you need to move.

[lotsahats]

OMG.
Where the heck do you live that you pay such low rent?
That would buy NOTHING, nowhere, not even a room in a share anywhere in NJ.
Perhaps you need to move.

I was wondering the same.

Actually, in my neck of the woods, a one-bedroom apartment for around $350 isn't that unheard of. But then again, I live in one of the cheapest parts of the country.

[xraya]

I live in a 2 bedroom apartment with my fiance and a roommate. We split the $1100 rent 3 ways. Which reminds me, our rent will be going up to $1170 in April.

[karm43]

Wow! Did you check the state standards?

[xraya]

the state standards for what?

[xraya]

Assess your budget. Are you considering reasonable and realistic amounts, going forward, for things like groceries, personal care, home maintenance, car maintenance, clothing, medical out of pocket, etc.? Do you have reasonable insurance? That would include reasonable deductibles on auto, but also health, life?

Are you contributing to 401k? If not, does your employer match? If they match - when is the next open enrollment for you to start contributing enough to get the maximum employer match?

would contributions to a 403b reduce my disposable income? I was contributing 5% last year, but I reduced it to 0 right before Christmas so I could spend more on presents. Great logic huh?

[SMinGA2]

You have very low living expenses... That may make it hard to get into a ch. 7? Out of curiosity, are you all 3 on the lease? Is the 3rd roommate reliable? I'm just wondering, if you file ch. 13 with a payment you can manage - are you likely to find yourself with higher living expenses because that roommate moves on?

The areas in your budget that I see lacking:
vehicle maintenance (routine oil changes, occasional brake work, tires, other scheduled maintenance-not sure if this was included in transportation)
ad valorem/registration fees (not sure if this applies in your state - do you have to pay to renew/register your vehicle each year?)
personal care (the misc. items like soap, shampoo, and so on as well as hair cuts)
bank fees, postage
life insurance

What are your deductibles on the vehicle insurance? If they're high, maybe lower them? Higher insurance payment now but better protection in case you need to file a claim.

Contributing to a 401k (or similar) would reduce your DMI. Say you return to 5% as you were before, that's about $200 per month you're investing in your future. Making a drastic change might get a trustee's attention, but chances are good that your attorney would tell you to go back to the 5% - since you were doing that before and its not anywhere near the maximum contribution level. It would also reduce your DMI.

[xraya]

The roommate is on the lease, however, my fiance isn't. He just moved in last month and we just haven't gotten to the leasing office to put him on it. He has suggested leaving him off so that it looks like I pay more in rent, but this really makes me uncomfortable. The roommate is fairly stable and I think she will stay put for awhile, at least for another year or so. She does plan to move to NC but not for a few more years. The only way I would see her moving out is if/when we have a baby and I would try to convert to a chap 7 then anyway. And we were just diagnosed with infertility a few weeks ago, so the baby making may take awhile.

I assumed that vehicle maintenance was included in the transportation category. Is this not correct?

Our vehicle registration in MA is paid every 2 years, but we do pay an excise tax each spring.

I didn't think to include personal care items. I will have to go through some receipts and check prices to get a number for that.

My bank doesn't charge any fees since I have direct deposit. I very rarely use stamps or send packages.

I don't have life insurance beyond what is provided by my work. My deductible on my auto insurance is $1000, I believe. I will check into that later today.

I re-enrolled in my 403b at 6%, which is what it would have been if I hadn't changed it last fall. (My company has a program you can enroll in that adds 1% each year to your contributions.) Would getting renter's insurance help reduce my DMI? What about pet care? Can I include those costs?

[SMinGA2]

I don't think there is a right or wrong way - you could detail it as much as you'd like or lump everything auto-related together. I was mainly trying to make sure you've accounted for everything. (If you file ch. 13, your plan payment is your DMI. If your DMI is wrong because you left out expenses, you'll have trouble.) You should somehow account for the excise tax & registration $. Registration amount, divide by 24. Excise tax, divide by 12. Those would be your monthly averages. In theory, you would want to set that $ aside each month. In reality, you don't have each expense each month. So you'd end up with some cash flow to handle the things that happen occasionally.

I would push for pet care to be included - and think it comfortably fits in the 'misc' category for IRS standards. If you have extreme expenses, keep receipts to back up your #s. Like if you have recurring vet bills, or your pet is on special food.

Since you're single, life insurance may not be a huge priority at the moment. But getting a policy when you're young helps you lock in a lower rate. It probably won't be a huge expense - maybe not even $20/mo - but it fits into the plan of getting your financial affairs in order. That's why this is also a good time to look at auto deductibles. Some car loans actually require that you don't go higher than a $500 deductible.

If you don't have renters insurance - you SHOULD get a policy. (I'm hesitant to tell people what they should/shouldn't do, because I'm no attorney & not in your shoes. But this is an exception. If you have a fire tomorrow - you'll lose a lot. A renters policy is pretty cheap.)

One other area to address - do you normally get tax refunds (fed & state) each year, or do you owe? You may need to adjust your withholding, which will change your net pay. If you file ch. 13, you don't want to end up in a situation where you owe on either. I believe the IRS has tax calculators you can use, to estimate any changes you should make for the year.

[catleg]

403b would reduce disposable income for a chapter 13.
You could contribute enough to get you into a bare minimum chapter 13 (36 months at $100, pays for the lawyer and not much else).
In theory you could have a zero dollar DMI but that freaks most attorneys out.

[xraya]

well I changed my deductibles on my auto insurance from $1000 to $500 today and got a renter's insurance policy as well. I also figured out what my excise tax/registration will be per month. These are all kind of small amounts, but maybe they will start to add up over time. I'm too tired to recrunch the numbers now (damn you third shift!) but maybe tomorrow or Sunday I will feel less foggy.