Disposable income enough for Chapter 13?

[susie]

It was no problem. Just 5 or 10 minutes, something like that. Very routine. Now we wait for objections, and the one I'm concerned about is the US Trustee maybe wanting to push us into a 13. I had thought it was the US Trustee who did the 341, but it was a chapter 7 trustee.

Thanks for asking!

[Minnymouth]

The Trustee handles the 341 meeting and the US Trustee oversees everything that he does. The US Trustee is usually the one that tries to force a Chapter 13..... if he see's it is an option.

Hopefully this will not happen to you...... but you will know before long, cause he will file a motion to convert with the Court if he thinks its feasible.

Check on Pacer and keep an eye on paperwork that is filed. He will have to send you a copy in the mail if he does....

Keep us posted...

[susie]

Thanks for the info, Minny. I'll definitely keep an eye on Pacer. Thanks again.

[rwiggum]

This thread has hit on a subject I am confused about. I thought if you were below your state's median income that you were a slam dunk Chapter 7 case. But my lawyer is telling me that because my disposable income is higher than something like $100 I would have to go Chap. 13 regardless of my income. Is this correct?

[SinkingFast]

Under the New Law, if you're below the Median then you only get a free pass as far as the Creditors are concerned.

No Creditors can object to you filing a Ch 7 when you are below the Median.

But the Court can object even when you are below the Median.

If your Means Test or Schedules I compared to J indicate in excess of $100/mo disposable income, the Court could object to you filing a Ch 7 and force you to convert to Ch 13.

[anonymuse]

This thread has hit on a subject I am confused about. I thought if you were below your state's median income that you were a slam dunk Chapter 7 case. But my lawyer is telling me that because my disposable income is higher than something like $100 I would have to go Chap. 13 regardless of my income. Is this correct?

I'm going to try to simplify a not-so-simple bk system. One piece of the puzzle is income, the other piece of the puzzle is assets--more specifically, non-exempt assets. Realize that this does not take into account every scenario.

I'll take the easy piece first. If you do not have any assets at all or do not have non-exempt assets, this makes you a Ch 7 candidate. That is to say, for example, if you own a home, your equity in it is NOT above the exemption for your state.

With income, there's two pieces to consider.

A) Your relationship to the median income in your state.

Being below the median income is not a "free pass" to a Ch 7. But it does give you a few advantages: you automatically pass the means test without a presumption of abuse; creditors cannot object to your filing; and, if you do wind up in a Ch 13, it will only be for a 36-month commitment period (instead of up to 60 months).

B) Your disposable income.

Even though you pass the means test with flying colors, your schedule I & J (Income & Expenses) is just as important. What the law says, and how it is being interpretted are two different things. Most trustees are only going by one part of the law. If you have at least $100 of monthly disposable income, then they want you to pay back that much into the plan for your commitment period irregardless of what percentage of the total unsecured debt can be paid back. The other part of the law (which is largely ignored), is that if you have between $100 and $166 of monthly disposable income, but paying that over the commitment period will not pay back 25% of the debt, then you can still file Ch 7.

Will be interesting to see how the tweaks to the forms will work themselves out for October to see if this is taken into account.

Good luck!

[rwiggum]

Thank you, anonamuse. I actually understood that!

I had been doing without things like health insurance to try and save money. But it looks like it might actually cost me more money to NOT pay for it.

[anonymuse]

Under the New Law, if you're below the Median then you only get a free pass as far as the Creditors are concerned.

No Creditors can object to you filing a Ch 7 when you are below the Median.

But the Court can object even when you are below the Median.

If your Means Test or Schedules I compared to J indicate in excess of $100/mo disposable income, the Court could object to you filing a Ch 7 and force you to convert to Ch 13.

SF,

Can you point out the legalese that is equivalent to "the credit cannot object when you are below the median"

[LostOne0069]

Under the New Law, if you're below the Median then you only get a free pass as far as the Creditors are concerned.

No Creditors can object to you filing a Ch 7 when you are below the Median.

But the Court can object even when you are below the Median.

If your Means Test or Schedules I compared to J indicate in excess of $100/mo disposable income, the Court could object to you filing a Ch 7 and force you to convert to Ch 13.

Sorry, but this is a little off.

If you are below the median income, Niether the creditors OR the court can object to you getting a chapter 7 based on the amount of disposable income you have.

The catch is that the court has an extra out in that they can object on the grounds of "abuse". Meaning if they think it will be an abuse of the chapter 7 code, they can object to you gettting a discharge. Unfortunately the definition of "abuse" is not given... but I do know that the bankruptcy court specifically forbids objections based on your disposable income if you're below the median income.

[LostOne0069]

SF,

Can you point out the legalese that is equivalent to "the credit cannot object when you are below the median"

Creditors CAN object, just not one the grounds that you make enough money for a chapter 13. For example, they can object on the grounds that you charged up your card to the max 30 days before filing or if they accuse you of fraud.

[SinkingFast]

SF,

Can you point out the legalese that is equivalent to "the credit cannot object when you are below the median"

I've been looking. UGH! I hate computer crashes and loosing bookmarks!!

It's in Section 707, I believe, but I haven't found it.

I said something about that the other day to the paralegal when we signed our Petition. That we were under the Median so only the Court could object. She said that was "kinda sorta right only way more complicated".

[alh]

United states code 707 (b) (7)

It is useful to read all of section 707.

http://www.doney.net/bkcode/ch07.htm#707

[CATCHMEIFYOUCAN]

"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. "

It just all sucks, why bother changing the law at all if your not going to follow it? I'm still waiting on confirmation of payment plan. The trustee didn't like the $250 a month, he wants almost $800 a month! According to the "new law," the median test shows I have no disposable income, according the "old law," rather - my real budget I have almost $800. Think I've lost! Unless I decide to quit one full time job, but catch 22, I need two full time jobs. Just my thoughts, I guess.

Catchmeifyoucan

[anonymuse]

CMIUC, I can't find the article right now, but there was a case where the means test was upheld as the amount of disposable income over Schedule I & J. I posted it but I can't find it. LOL

[SinkingFast]

CMIUC, I can't find the article right now, but there was a case where the means test was upheld as the amount of disposable income over Schedule I & J. I posted it but I can't find it. LOL

Just like me and the stinking article that discussed Objections to Filings below the Median on the Means Test.

ALH referenced to the text of the Code, but I had bookmarked a very good discussion of 707b. There were references to previous cases that substantiated why UST's rule they way they do. And a whole discussion about "the totality of circumstances" of the Debtor/Filer with further case references. It was a very good explanation of how that particular section of the Code is applied.