What if you don't have disposable income?

[Help!]

We are in the most bizarre situation if we are forced to convert to 13. Because the six months of income on the means test includes several months of dual income (which we no longer have), income from cashing out stock, husband's bonus, cashed out 401K, etc. we would fail the means test unless we can rebut the presumption of abuse.

Obviously we were poorly advised about the timing of our filing. My husband's income at his new job is lower, I am unemployed, our living expenses have gone up, my medical expenses are $700 above the IRS standard and our schedule J is -$1500. Even if we were forced to take a forbearance on student loans we would still be at -$750. How the heck would they come up with a Ch. 13 payment? They don't use those same six months of income to determine Ch. 13 payments, do they? What else could anyone do - make their expenses look like they're less than the really are just to come up with a positive number?

[Flamingo]

A Chapter 13 payment cannot be based on income that has not yet been earned or guessing what one's income might be. It is based on income for a certain period prior to filing. That is why you provide all that financial information and paystubs - to determine your standing and what Chapter you can or can't file. The new law is also geared to forcing more people into a Chapter 13 and cut down on the number of Chapter 7's filed. Your attorney best knows your financial situation and is the best source as to what to do if you feel you will not be able to make those Plan payments.

[vleisme]

Why don't you dismiss then re file when the previous 6 months will reflect the lower income?

[Help!]

I think that will be our next step. The downside is that we will pass the means test but still be above the median. We might have to go another round with the UST - not sure I'm up for that!

[holding on]

The six months income MUST be used for the means test, but that's not necessarily the case when it comes to formulating the 13 plan payments. That is determined by what your income and expenses will actually be during the term of the plan. Now you will have to have some legit proof of what that will be to the point of common sense.

That's the quirky thing about the means test, you could be fired today and totally broke by tomorrow, but if your average income from the previous 6 months is above a certain amount, sorry! no means test passing for you.