Disposable income is approx. $800/month, qualify for Ch. 7??

[Jason(Kentucky)]

I have a ton of questions, sorry. Currently, my disposable income is around $800/month. This does NOT include student loans in default. After I get in good standings with the student loan people and start paying them back regularly, I'm guessing my disposable income will be around $4-500/month.

Will I still qualify for a Ch. 7? If not, couldn't I simply assume some more expenses (ie. a more expensive apt.) to bring my disposable income down so I would qualify?

I really don't see the merit in a Ch. 13, I don't have any tangible assets to protect and if I wanted to pay back my creditors, I can do it on my own.
Thanks again,
Jason

[HHM]

The cut off for disposable income ("DI") varies from region to region, but you can be pretty sure that if your DI is above $150 and you file a chapter 7, you will likely get an objection to discharge from the US Trustee.

Also, the test is "reasonably necessary" living expenses. I think it would be an incredibly unwise decision to up your expenses (especially on long term items like rent or a car) just to qualify for a chapter 7. Even if you file a chapte 13, if your expenses seem rather lavish, there will be objections. Your entitled to a car, but is a $1100 per month paymetn on a Mercedes 500 SEL, a reasonable necessary living expense?

And if, as you say, you can pay them off on your own, you really shouldn't be considering BK.

[Jason(Kentucky)]

Thanks for the reply. I don't have a car loan currently, I was just thinking in the short term (maybe get a 6 month apt lease) that I could get a more expensive apt. ( I only pay $450/month now) and that would put me in the disposable income bracket of $150/month.

Didn't mean to sound arrogant about the Ch 13, but I don't see the merit in it for my situation. I could "technically" pay it back, but paying $500/month on around $24K would take 4 years. Plus I have $22K in student loans. It's a trapped feeling I'm trying to escape. Ch. 7 would at least eliminate about 24K of debt.

Also, is a cell phone and internet service considered "reasonable necessary living expenses"? These are really the only bills I have besides rent, utilities and food.
Thanks a bunch for your help.

[HHM]

Thanks for the reply. I don't have a car loan currently, I was just thinking in the short term (maybe get a 6 month apt lease) that I could get a more expensive apt. ( I only pay $450/month now) and that would put me in the disposable income bracket of $150/month.

Didn't mean to sound arrogant about the Ch 13, but I don't see the merit in it for my situation. I could "technically" pay it back, but paying $500/month on around $24K would take 4 years. Plus I have $22K in student loans. It's a trapped feeling I'm trying to escape. Ch. 7 would at least eliminate about 24K of debt.

Also, is a cell phone and internet service considered "reasonable necessary living expenses"? These are really the only bills I have besides rent, utilities and food.
Thanks a bunch for your help.

Yeah, what is considered a reasonable necessary living expense is actually a very broad concept and does include, cell phone, cable TV, etc etc. And rightly or wrongly it will vary from person to person based on their income. A person making $3000 per month might not get away with having a $1600 per month mortgage as reasonably necessary, whereas a person with $4000 per month in income would. A chapter 13 doesn't require you to be a pauper to pay back your bills, but there are limits.

What is your average interest rate on those cards. You might be a better candidate for credit counseling if the interst is unreasonably high.

Also, I didn't mean to come off flipant

[Jason(Kentucky)]

Yeah, what is considered a reasonable necessary living expense is actually a very broad concept and does include, cell phone, cable TV, etc etc. And rightly or wrongly it will vary from person to person based on their income. A person making $3000 per month might not get away with having a $1600 per month mortgage as reasonably necessary, whereas a person with $4000 per month in income would. A chapter 13 doesn't require you to be a pauper to pay back your bills, but there are limits.

What is your average interest rate on those cards. You might be a better candidate for credit counseling if the interst is unreasonably high.

Also, I didn't mean to come off flipant

I'm really confused about this disposable income situation. I mean, for the first time I'm living below my means, trying to do the right thing and get out of debt, yet my higher disposable income might prevent me from filing a Chapter 7. Now had I gone out and financed a car or increased my living expenses to the point where I was broke, I would easily qualify. Just seems unfair to me. I think BK 7 would be a huge relief and allow me to knock out my student loans in approx 2.5 years. I desperately want to be debt free and own a home some day.

Also, I have been in default for over 2 years on all my CC's and student loans. My credit is probably as bad as they come right now. I don't know if credit counseling would even be a viable option at this point, maybe I'm wrong. Truthfully, I'd just like to start over, and learn from my mistakes (ie: never, ever use CC's and credit again, except for a mortgage)

How would you handle this situation...thanks.....Jason

[HHM]

Sorry, I didn't realize we were carrying on conversations in 2 forum threads. Being in default for 2 years puts you beyond credit Counseling. I really can't recommend that you increase your expenses just to qualify for a chapter 7, but now that you have some info on how it works, do some additional research, and if you NEED to take on additional expenses that are reasonably necessary for the average person, then do so.

I think a chapter 7 would be the least expensive, most direct way to handle your situation.

[Jason(Kentucky)]

Sorry, I didn't realize we were carrying on conversations in 2 forum threads. Being in default for 2 years puts you beyond credit Counseling. I really can't recommend that you increase your expenses just to qualify for a chapter 7, but now that you have some info on how it works, do some additional research, and if you NEED to take on additional expenses that are reasonably necessary for the average person, then do so.

I think a chapter 7 would be the least expensive, most direct way to handle your situation.

Thanks HHM, yeah, I have tons of questions and have posted a few times on here. I've got to find a way to qualify for a Ch 7. My salary is only 28K + bonuses which isn't much, maybe 2K/year. How do they verify how much disposable income you have? Submit pay stubs and bank statements I'm guessing? There's got to be a viable way to qualify for a 7, as bad as my credit history is compouded with 24K in CC's and 22K in student loans.

[HHM]

Hmm, if you make $28k a year, you really shouldn't have too much trouble getting a chapter 7. And yes, you will have to supply the BK trustee, paystubs and bank statements if you file.

[Dawn1970]

I can't believe you'd have any trouble at all qualifying for a 7 if you make $800 a month and have no assets and owe that much in student loans.