Planning to file ch 7

[tonyseattle]

[FilingOnMyOwn]

I believe it is 90 days of not using credit of any sort is what they look for. Anything within 90 days they can make you pay back. Although the trustee will ask you questions going back the last 12 months for transactions, and 2 years for tax returns, $4,000 in cash advances to pay for 3 months living expenses if you were unemployed I don't believe would be considered abuse. You should also not pay anything at all on these debts if you plan to file. If you can afford to make minimum payments, then why would you need to file, if you can afford to pay your bills? Thats going to be the way they look at it when considering whether you are eligible for 13 instead of 7. You want your disposable income to exceed by less than 100$ your monthly living expenses, which also should be allowable expenses. In seattle, you should be paying under 1,500 for rent or housing, and if you're single, 200 or less for food. 400 or less for all other combined expenses. So basically take your housing costs and add 500$ or so, then you wouldn't want your take home monthly pay to exceed these expenses by more than $100. And yes you would be well under the median income to fit these criteria. So you can probably safely make up to2,000 a month or less, as long as your income exceeds your total expenses by less than 100$. Also expect that the trustee may want your tax return. So I would file your taxes asap in 06, and wait to file your petition until you get a refund, if you're expecting one. If the refund exceeds the allowable exemption for cash in your state, you could spend the extra money on essential items like groceries, car repairs, or maybe a giftcard at wal-mart or something. For example, if you got a return for 1,500, and the allowable cash exemption was 1,000, you could buy a wal-mart giftcard for 500. This way, you may be able to keep both the cash and the giftcard (as the giftcard is not redeemable for cash), but just in case the trustee wanted the whole 1,500 tax return, you could pay him the 1,000 and pay him the 500 out of your income, in the meantime using the giftcard for the groceries you would normally buy. Its complicated and theres alot for you to learn, but just do your research and you should be fine. This advice is not perfect, but its just part of what you will need to gather a 'big picture' type of idea for your individual situation, to understand how the trustee will be seeing your case from his eyes when the time comes.

[bkfiler]

creditors can and do look back 1 year at things. nothing is fool proof. remember a creditor wants their money. if they think that they can scare you into paying even if it was 2 years ago then they will try. its just a phone call to your attorney to see what they will offer up.

having said that, making min payments at least without putting a downpayment to an attorney until you want to actually file would go farther toward insuring that you have tried all you can to pay.

i wonder if talking to your creditors and making even lower payments might help. if you tell them that you are considering bk then thats in their record for good and it will cause you problems. keep this in mind.

keep reading and learning. planning your bk is smart and to your benefit. good luck

[FoolAndHisMoney]

They usually consider your financial state when you made the cash advances, unless they are over a year old. If you were actualy unemployed and made those large cash advances for any reason the creditor would argue that you "did not have the intention or ability to pay". The longer you wait the better.

If you are below the states median income then yes you would qualify for a chapter 7 automatically. If you are above it you still could qualify depending upon your allowed expenses. My income is $15,000 over my state's median income and I actually qualify for a chapter 7. I pay heavy health/disablility/life insurance plus my region is expensive. I also pay 32% in combined taxes since I have no deductions of any kind. According to form b22 I come out negative $43. Maybe you will too if you get a job.

Good luck!

[StaciMM]

Even if you're below the state's median income, you can end up in a ch. 13 if you have disposable income. There is no guaranteed ch. 7.

If your income is $24,000/year and your expenses are only $750/mo (such as having no rent, car payment, etc.) then you will NOT be eligible for ch. 7.

Waiting another 3-6 months, to put time between the cash advances & transfers & filing is a good idea. Cash advances & transfers are more likely to create issues than standard purchases. Making the minimum payments for a little bit longer makes it less obvious that you planned to default/file so far before you actually do.

In the meantime, read all you can & ask any questions that come to you.

[tonyseattle]

Thanks, but need further clarification

Thanks for all of the responses! Things are much clearer now, but I am still hearing conflicting information.

Some people seem to think that as long as I make under the states' median income I automatically qualify to file Ch. 7 regardless of my disposable income.

Other people think that even if I make less then the median income I still may have to file Ch. 13 becuase it is my disposable income that is important.

Could anyone please provide further clarification on this?

Thanks!

[StaciMM]

My understanding: The new laws provide that if you have $100+ in disposable income & can repay a % of your debts over 5 years you would end up in a ch. 13. If you have more than your state's income, it will be nearly impossible to file for ch. 7 unless you have unusual circumstances (such as ongoing medical expenses).

In all honesty, the new BK laws are still being 'discovered'. Most of the people here filed under the old. A good starting point to see where you stand would be to consult with an attorney or 2. Call around (yellow pages or something similar)-most will probably still schedule free consultations. Some things will vary by state, such as exemptions and expense allowances.

Thanks for all of the responses! Things are much clearer now, but I am still hearing conflicting information.

Some people seem to think that as long as I make under the states' median income I automatically qualify to file Ch. 7 regardless of my disposable income.

Other people think that even if I make less then the median income I still may have to file Ch. 13 becuase it is my disposable income that is important.

Could anyone please provide further clarification on this?

Thanks!

[bkfiler]

yes, first comes the "do you have disposable income" part. if you do have some left over and its enough to pay them some back then you cant file a chapt 7.

then comes the additional rule of "is your income below the median for your state". if it is AND you dont have disposable income then you cant file a bk chap 7 at all, or at least will have trouble trying to.

this is because they figure that if you make 'so much' then you have to cut your expenses, period.

[StaciMM]

The disposable income issue has always been a determining factor. That didn't change w/ 10/17. What changed is how a person's expenses are viewed. It used to be that if you could prove your expenses (receipts, bank statements, etc.) then for the most part things would not be questioned. Now, however, expenses are more needs based. If you have $2000/mo in gross pay, you'll have a hard time rationalizing a $200/mo cell bill and $150/mo cable bill. The 'misc' category would be ok for these, but if you're only allowed $180 for 'misc' then the trustee can say: You can do without those expenses, cut them down to $180/mo. You have $170 available for a ch. 13 plan.

*Assuming ~$1500-1600 take home pay, and that rent, utilities, grocery, household & personal items, transportation expenses use of the rest of the income.

[FoolAndHisMoney]

In a nutshell you take the b22a means test. This is based on limits of expenses and no more then their limits except for special circumstances. If you are below the states median income then only the us trustee and judge can dispute a chapter 7 and not a creditor. If you are married and your spouse doesn't file you still must list their income on your form . If you have kids that live at home and work on the books their income must be listed too. (I'm curious to see how significant others and domestic partnerships come into play with this.)

Once you complete the means test and check the "presumption does not arise" you do your schedules I & J. As Staci mentioned it's based on your real expenses and income that you have to list under oath if you have disposable income of $100 or more then the us trustee can still dismiss or convert you to a chapter 13.

[FilingOnMyOwn]

You ideally want to meet both criteria, however its more important that you have under $100 per month after all your expenses. The median income comes 2nd, and somewhat naturally. Unless you are paying a ridiculous and unallowable amount for living expenses, you should already be under median income. If you're over median income and are paying reasonable amounts for living expenses, than you would likely have more disposable income than allowed for new chap. 7.

[bkfiler]

well here is an opposite opinion by an attorney:

http://www.mcfarlinlaw.com/phpbb/viewtopic.php?t=73

"That's a good question, and it's yet to be finally determined how the US Trustee will treat such a situation. I am taking the position that disposable income in now meaningless if the consumer is under the state median income. If there is going to be a new "objective" standard for income, the US Trustee should have to abide by it just like the rest of us. So...if you're under the state median, I think disposable income may be irrelevent."