What will happen (new law potential issue)

[StaciMM]

In GA, the 'median income' for a family of 1 is $34,396, so a single person w/ no dependents earning $2875/mo would not qualify for a chapter 7.

$2875 less 20% (which is low for a single person I think) would be $2300 Gross.

In my county, a single person would be allowed the following expenses:

Housing & Utilities $1233
Living Expenses $577
Auto Expenses $717

End result is -$227 so chapter 13 is out. (And if there were student loans, or other allowed expenses such as medical insurance, even renting the cheapest place available wouldn't help.)

What then?

[HHM]

Umm, what exactly are you asking...

[StaciMM]

If a person is over the median but IRS allowed expenses exceed gross pay, is the person just out of luck? Or would they be allowed to file chapter 7 even though their income is over the median?

[HHM]

First, your actual expenses need to match or exceed that of the IRS allowed expenses to claim the maximum, you don't get to claim maximum allowed expense if you don't actually spend that. (this will probably not be a problem).

Since I am not keeping close tabs on the new law, I can't answer your question with certainty. However, the median income issue, as I understand it, is a rebuttable presumption. What that means is, if you are above the median income and filing for chapter 7, you are presumed to be making a bad faith filing, however, you can rebutt that presumption by proving your expenses exceed your income (and if your expenses are at or below the IRS allowed expenses, your expenses are assumed to be reasonable).

So I think you could still get into a chapter 7. The confusing thing about means testing is there are really 2 different means tests. One for qualifying for chapter 7, and then another for figuring out what you would pay under a chapter 13. I have seen articles where the author presents a scenario just like your describing, in that under the chapter 7 qualification means test, it shows the debtor has disposible income, but when it comes to the making the chapter 13 plan, there really is no disposible income.

[Minnymouth]

Interesting.....................

I'm learning a lot today,

Minny