Chapter 7 - Median Income Scenario

[BK09]

Here is my situation - I have met with one attorney, with the mindset I would not qualify for Chapter 7 but he said it was a possibility (I have another appt next week with a different attorney). I told him our income and he said we could deduct our housing expense (and utilities?) to probably get us in a position to file chapter 7 - here are the numbers......both of us are filing -

Wife Income - 36K/yr
My Income - 42K/yr
My PT job - 3500/yr
Total income = 81,500/yr

deduct housing (based on IRS schedule) = 1476 x 12 = 17,712

81500 - 17712 = 63,788 income less housing

Median in this state is 63,079

My question is does the means test allow you to deduct anything other than housing expense? If not, it looks like I'm going chapter 13. Any help is much appreciated.

BK09

[liz417]

Hi,

Yes it is possible to qualify for a ch 7 although you are above the median. It all comes down to your monthly expenses. Look up your state on the IRS Living Standards (sorry, don't have the link handy, but google it) and use that for your guidelines, also check out this website and do the means test yourself: http://legalconsumer.com/ and it will give you a pretty good idea of where you stand.

[BK09]

Thanks for the reply, I will check the link and see where we stand.

[BK09]

Thanks Liz for the link..............a lot of other expenses factored in besides housing expense.

We should qualify with no problem with $-704 in monthly disposable income.

After doing the means test, I feel compelled to share my story. Always said I would not file BK to get rid of this unsecured debt but the more it affects my daily life and children, the more I feel compelled to file. Been carrying 50K in cc debt for several years now. Recently closed on a house in september (moderately priced - and can afford the mortgage), planned on finishing the basement with elbow grease and some friends within 24 months and cash out refinance to pay for the majority of the cc debt. It appears filing Chapter 7 is an option that will wipe the debt out faster and there is no guarantee the house will appreciate enough in today's climate to do the refi. I would rather go ahead and bite the bullet and try to rebuild credit status after BK vs putting everything on hold for the refi that may not even happen.

My feelings concerning filing are mixed, as I feel we will have to swallow a lot of pride (public record) and battle feelings of failure. Freeing us of this debt load and the monthly stress of trying to make ends meet will far outweigh the negative effects I listed above (I hope). We have learned our lesson with money and plan on truly using chapter 7 as a fresh start. Already met with 1 attorney, going to interview a second on the 30th.

This site has been somewhat theapeutic for me and I will continue to share my experience throughout the process. Cheers to all and remember to enjoy your children and family during the Holiday Season! They are truly what life is about.

[liz417]

Hi BK09,

That's what BK is for...a fresh start. You've got to think of it as business decision, not a failure on your part. I understand the feelings though. I think you are on the right path and the hardest part is behind you; actually making the decision to file.

Good Luck to you and please keep us posted.

Happy Holidays to you and your family