Disposable income enough for Chapter 13?

[ConnieS]

Someone should be able to tell me if this is accurate. I foundthis formulaon another forum for determining if you have enough disposable income to be forced into a Chapter 13. Does it sound about right to you?

Take your total unsecured debt (mine is $75,000) and divide by 3 (years)
25000
Divide again by 12 =2083.33
Then multiply by 30%
2083.33 X 30% = 624.99

Supposedly according to these calculations you (I) should not have more than this amount (624.99) of disposable income after necessary expenses or you will be put into a Chapter 13. Does this sound plausible to you.

As it stands right now, I am $160 in the hole every month. Can't imagine having that kind of extra money left over and filing for BK.

[FoolAndHisMoney]

This formular is how it's determined

http://www.bankruptcyaction.com/questions.htm

Going by this if you have between 100 & 166 you can still qualify for a 7 as long as it's less then 25% of your total unsecured debt. This is because a plan wouldn't be feasable paying back 7000 to unsecured debts of 75000.

Some posted here said that the courts are throwing anyone in a 13 even if they owe 100k as long as they have 100 left over on the means test. Every region is different though.

[ConnieS]

Thanks for the reply and link.

I am already under my states (PA) median income by more than $10,000 so qualifying for a 7 isn't a problem. Even if I would have $100 of disposable income after expenses (I am approx. $160 in the red) and I do the math I would not have anywhere near 25% of my unsecured debt to repay. 25% of my total debt would be $18750 or $312.50 a month. Does this seem accurate to you?

[anonymuse]

This is one of those gray areas in the law since some don't even look at that calculation at all. Depends on your region and trustee.

FAHM, do you think they consider it to be not feasible, or just not worth it--I would think creditors would be happy to get back anything whether it be 10% or 25%.

[susie]

This is where we are. We filed today, a chapter 7. We showed $120 in disposable income, but that won't pay 25% of our debt, so our attorney filed it as a chapter 7. Our attorney is a trustee, so I hope he can get it through like that, though he did tell me that with the new law anything is possible and we just don't know if it will have to be converted to a 13.

[anonymuse]

This is where we are. We filed today, a chapter 7. We showed $120 in disposable income, but that won't pay 25% of our debt, so our attorney filed it as a chapter 7. Our attorney is a trustee, so I hope he can get it through like that, though he did tell me that with the new law anything is possible and we just don't know if it will have to be converted to a 13.

You have just become a major test case!!! I hope your attorney forewarned you. This is the part of the law no one has been adhering to; instead, they just bump anyone to Ch 13 even if they can't pay 25% of their debt. We will all be waiting to see your progress in this.

I just thought of a question pertaining to this. Is it 25% of all unsecured debt or 25% of all dischargeable unsecured debt?? (Sorry, being too lazy to look to see which way the law is stated exactly--surgery yesterday and 2 am insomnia but tired.) The reason I ask is whether student loans (a non-dischargeable unsecured debt) could make a big difference in the 25% of the calculation. Do you have student loans?

[susie]

No, I finished paying off my student loans several years ago. All unsecured debt that I have is dischargeable.

[Jeepy89]

Susie - are you under your states median income?? also when you say you had $120 in disposable income is that on the means test or schedule j??

I filed Chap 7 - we are over the states median income (MI) by almost 7K but on the means test we are 300 in the hole but our sch J we have 2.66 left. I had my 341 meeting the trustee didn't say much but her boss has asked our lawyer for further info on income so I guess they are looking close at our case. I am on pins and needles if they will convert to a 13. I just don't see how they think we would have anything left over to pay in a chapter 13.

[susie]

We are over the median income (MO). The means test showed us to have $120 in disposable income, but schedule J showed about $40 left over. Don't have my copy of everything yet since we just filed yesterday, but I am pretty sure $50 is what was showing on schedule J. I'm worried we will have to convert also, but my 341 isn't until 9/1 so I have a while to wait.

[Jeepy89]

Susie

It will be interesting to see how our cases go - hopefully we both will get through with the chap 7 - keep me updated!!

[coma]

We flied under the old law, and our 341 was smooth, until the UST decided to file a motion to dismiss for substantial abuse, because the debts were "consumer" in nature. We were well under the median in HI, and all of our expenses were in line with the IRS figures, even though we were under the old law/ We were going to fight but the attorney told us we could fight and lose then end up dismissed...we couldn't handle that at this point, so she got us a bare bones payment deal with the UST.

I think we got singled out in the beginning because we were pro se and had decent income, though still under the median, and the powers that be were looking to crack down in HI.

Anyway, out 13 plan was confirmed in June at $300 per month for 36 months. The UST got 10% or $1080, the attorney gets $2200, and the remaining $7520 got to over $75,000 in unsecured debts...so we're paying about %10 back...should we have had no problem getting a 7, in my opinion, Yes! Were we an easy target...of course...my lesson learned is never go pro se...it paints a huge target on your back.

[anonymuse]

We flied under the old law, and our 341 was smooth, until the UST decided to file a motion to dismiss for substantial abuse, because the debts were "consumer" in nature. We were well under the median in HI, and all of our expenses were in line with the IRS figures, even though we were under the old law/ We were going to fight but the attorney told us we could fight and lose then end up dismissed...we couldn't handle that at this point, so she got us a bare bones payment deal with the UST.

I think we got singled out in the beginning because we were pro se and had decent income, though still under the median, and the powers that be were looking to crack down in HI.

Anyway, out 13 plan was confirmed in June at $300 per month for 36 months. The UST got 10% or $1080, the attorney gets $2200, and the remaining $7520 got to over $75,000 in unsecured debts...so we're paying about %10 back...should we have had no problem getting a 7, in my opinion, Yes! Were we an easy target...of course...my lesson learned is never go pro se...it paints a huge target on your back.

That's just a load of bunk--is it really worth the cost to the system for someone to pay back only 10% of their debt? That's why its supposed to be 25% to force you into a Ch 13.

[SinkingFast]

We had one attny figure us a $195/mo, 5 yr Ch 13 plan. With what we owe, that won't even pay 10% total, including Trustee's Admin and Attny's remaining Fees.

Trustee's fee of 8.5% and figure in $1500 extra for an attny, on average, we would pay back right at 7% to Creditors. The Trustee would be the winner there.

Probably the reason you wound up in a Ch 13, Coma. It was more about lining the Trustee's pockets than about justice.

[anonymuse]

Credit card companies do get to right this off and have insurance for this exact purpose. There are plans with people paying back 0% of unsecureds. Sometimes I think there's some pretty fishy smelling stuff around here.

[SinkingFast]

I've seen one Ch 13 filed here like that Anon.

The people were below the Median. In arrears on their house and car, AND owed back property taxes on the house. Evidently they were desperate to keep their house and/or car. Their plan was figured for 42 months, 100% to Secureds and Priority Debts. Trustee's %, attny fees, mortgage, auto loan, and taxes. Nothing to any Unsecured Creditors.