We are over the median now what??

[jessegirl]

Hi All,
When we went to the attorney to see what our options were, we originally thought that we would have to do a chapter 13 cause of our income. But, when we told of attorney the amount of our yearly income we knew we were over but didn't know how much. We are about 20,0000.00 over the median for a chapter 7. Our attorney asked us a bunch of questions as far as our monthly payments on things and then said you can do a chapter 7. We were shocked. How can that be? Our 1st mortgage payment is quite high like 2400.00 a month, could that be why? I also have a 2nd mortgage too.

[keepmine]

What sort of disposable income are you showing. There may not be enough to fund a Chapter 13.

[jessegirl]

sorry if i sound stupis but what do you mean by disposible income?

[jessegirl]

do you mean after our mortgage, taxes, utitlies and living expenses are paid? if so i probably have maybe 200.00 dollars left over

[laurannm]

If you are showing $200 then you are not eligible for a Ch 7. Did your lawyer run a preliminary means test for you?

[AngelinaCat]

Hi jessegirl, welcome to this wonderful Forum:

'Disposable income' is what you have left over at the end of the month after you pay all of your bills, buy your groceries, make all your mortgage payments, pay into your retirement account--that sort of thing.

[jessegirl]

Oh then about 200.00 maybe less each month. So if i do not qualify for a chapter 7 then what? a chapter 13? we have maybe 75.00-100.00 left over every paycheck maybe. Some months its in a negative if something comes up. Now What. Gee i am really scared. What if i do not qualify for anything then?

[Cali]

I was over 23k when I filed C7. And I had my 341 almost a month ago.

[Lajazz947]

sorry if i sound stupis but what do you mean by disposible income?

There is no such thing as a stupid question here.

Ask away.

No one knows it all.

Good luck.

[Frogge]

jesse, the way I understand this is that if you are very close to having no disposable income on an initial test, some attorneys may think its worth it to try and 'fit' you into a chapter 7, unless there's some reason why you need to file a 13, or feel the obligation to pay your debts through a 13 plan.

[abp559]

Oh then about 200.00 maybe less each month. So if i do not qualify for a chapter 7 then what? a chapter 13? we have maybe 75.00-100.00 left over every paycheck maybe. Some months its in a negative if something comes up. Now What. Gee i am really scared. What if i do not qualify for anything then?

For chapter 7 purposes, the actual money you have left over has very little to do with it. You are allowed certain expenses based on IRS standards, and you can add on top of that some of your real expenses (like your actual mortgage payments). The IRS allows both a "vehicle operation" expense and a "vehicle ownership" expense. Your regular ongoing expense may be less than that allowance, but when you add in things like car repairs that are expensive but (hopefully) infrequent then it makes more sense.

If your attorney ran your numbers and said you qualify, I wouldn't argue too much (check out the means test form he filled out to see what the numbers are).

[laurannm]

Don't be scared! That is what we are here for

If your lawyer is saying you can do a Ch 7 then it's possible he ran a prelim means test and you passed. Worst case if you don't qualify for a Ch 7 (meaning you have disposable income) then you qualify for a Ch 13.

Is the first attorney you spoke with? If so, it's highly recommended you speak with 2-3 more attorneys for additional opinions.

[thaynes]

If you have $200 disposable income left over you can still qualify for a chpt 7 if your debt is high. In the means test, your disposable (and how much a payment you can make) is compared to your total debt (25% I think) to see if you can make chpt 13 payments. That could be why your atty told you that you qualify for a chpt 7.

Good luck.

[jessegirl]

This is the second attorne we spoke to, the first one wouldn't run any numbers until we agreed to sign. So we said "See Ya". I just wonder that if he ran the numbers and we passed the means test and we are over by 20,000.00 and like i said before that sometimes we have 200.00 or less left over at the end of the month, that the trustee will say that you have some money left over so you have to do a chapter 13. Can they do that?

[laurannm]

If you have $200 disposable income left over you can still qualify for a chpt 7 if your debt is high. In the means test, your disposable (and how much a payment you can make) is compared to your total debt (25% I think) to see if you can make chpt 13 payments. That could be why your atty told you that you qualify for a chpt 7.

Good luck.

I think the debt threshold (25% of total unsecured debt) comes into play if you are showing between $110 and $182.50 in disposable income. Anything more than $182.50 and you don't pass.