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under median-fill out budget differently? Are there predefined/allowable amts?

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  • under median-fill out budget differently? Are there predefined/allowable amts?

    if you are under the median, I know that you automatically qualify for ch7 under the means test , income wise. But for Ch13, what does this mean? Does being under the income mean you fill out the budget form differently that yields the DMI number?

    Are there predefined/allowable amounts that can be used in the expenditure categories based on , say, zipcode?



  • #2
    Originally posted by rayrod View Post
    if you are under the median, I know that you automatically qualify for ch7 under the means test , income wise. But for Ch13, what does this mean? Does being under the income mean you fill out the budget form differently that yields the DMI number?

    Are there predefined/allowable amounts that can be used in the expenditure categories based on , say, zipcode?
    You don't automatically qualify for a Chapter 7, under Means Testing, just because your 6-month lookback shows that you are under-the-median income. You qualify because you cannot provide a reasonable dividend to unsecured creditors over a period of 36 - 60 months in a Chapter 13. The formula to determine this is typically based on the Means Test. Those under-the-median do not complete the entire Means Test (but they do complete the first part). The second part of a Chapter 7 case is that they look at your actual income and expenses (Schedule I/J).

    The means test uses numbers from the United States Trustee's Means Test Program website. Those numbers are updated at least twice a year. The numbers are national, regional, and sometimes by county. You complete the Means Test for both Chapter 7 and Chapter 13. The entire purpose is either to "pass" the means test by being under-the-median or by not being able to provide a meaningful dividend to unsecured creditors in a Chapter 13. Again, the Means Test is only the first part of the inquiry.
    Chapter 7 (No Asset/Non-Consumer) Filed (Pro Se) 7/08 (converted from Chapter 13 - 2/10)
    Status: (Auto) Discharged and Closed! 5/10
    Visit My BKForum Blog: justbroke's Blog


    I am not an attorney. Any advice provided is not legal advice.

    Comment


    • #3
      If you are under median in a Chap 13, it means your minimum plan length is 3 years instead of 5. But, because your income is low, you may have a hard time presenting a feasible 3 year plan, in which case you would propose a longer plan. You are concerned about non-exempt equity. To have a feasible plan, your schedules I/J would have to show that you have enough disposable income to pay off non exempt equity plus trustee fees and any other amounts that must be paid during the 3-5 year plan. In calculating your DMI, you include your actual projected expenses, which would be based on your current expenses unless you expect a change.
      LadyInTheRed is in the black!
      Filed Chap 13 April 2010. Discharged May 2015.
      $143,000 in debt discharged for $36,500, including attorneys fees. Money well spent!

      Comment


      • #4
        thanks for the input. One question on the link provided by the first commenter... what is meant (what is included) by ' the actual administrative expenses of administering a chapter 13 plan' in this part of the US ustice page? It then gives by living area a certain pctg..in my area of no IL , it gives 7.7 pct

        Section III. Administrative Expenses Multipliers


        11 U.S.C. ยง 707(b)(2)(A)(ii)(III) allows a debtor who is eligible for chapter 13 to include in his/her calculation of monthly expenses the actual administrative expenses of administering a chapter 13 plan in the judicial district where the debtor resides.

        The Executive Office for U.S. Trustees issues the schedules of actual administrative expenses which contain, by judicial district, the chapter 13 multiplier needed to complete Official Bankruptcy Forms 122A-2 and 122C-2. Form 122A-2 is the form certain chapter 7 debtors will complete and the multiplier is entered on Line 36; Form 122C-2 is the form certain chapter 13 debtors will complete and the multiplier is entered on Line 36.
        Another couple of questions:

        1. I notice that 2009 figures are used for living expenses ( food housekeeping supplies, apparel svc, personal care , etc). Why is this not updated for 2017 as the others are? Seems inaccurate and unfair.

        2. I assume all these expense figures are monthyl amts, correct? Each exhibit does not say spell this out.

        3. Does the debtor have the choice to use actual expenses or the published standards whem filling out the DMI form? Does the debtor haveto be consistant in this election for all expenditure categories?
        Last edited by rayrod; 09-20-2017, 02:35 PM.

        Comment


        • #5
          This "trustee" expense is their commission/fee paid from your payments to the Trustee for their expenses. If you are in a Chapter 13 and have disposable monthly income (DMI) this comes from the DMI so you do not ever worry about this fee. The only time to worry about this fee, which can be 10%, is when you're in a 100% plan. There are few plans that are 100% plans.
          Chapter 7 (No Asset/Non-Consumer) Filed (Pro Se) 7/08 (converted from Chapter 13 - 2/10)
          Status: (Auto) Discharged and Closed! 5/10
          Visit My BKForum Blog: justbroke's Blog


          I am not an attorney. Any advice provided is not legal advice.

          Comment


          • #6
            Originally posted by rayrod View Post
            1. I notice that 2009 figures are used for living expenses ( food housekeeping supplies, apparel svc, personal care , etc). Why is this not updated for 2017 as the others are? Seems inaccurate and unfair.
            I don't know what you mean by that. Who used the 2009 figures? Remember that these numbers actually come from the IRS Financial Collection Standards. Many are only updated after census. I don't even know where you noticed 2009? What will really drive you crazy is that these numbers can also decrease (they don't always go up and many times they stay the same).

            Originally posted by rayrod View Post
            2. I assume all these expense figures are monthyl amts, correct? Each exhibit does not say spell this out.
            Except for the annual income, the numbers are monthly. These are used on the Means Test which is complex and the text refers to 11 USC 707(b)(2). It is 11 USC 707 which says that these numbers are monthly. (Sometimes law refers back to other parts of the law so that the definition is in one place.)

            Originally posted by rayrod View Post
            3. Does the debtor have the choice to use actual expenses or the published standards whem filling out the DMI form? Does the debtor haveto be consistant in this election for all expenditure categories?
            What DMI form? There is the Means Test (From B122A/C Part 1 and 2) and then Schedule I and Schedule J. You must use the UST Program Numbers on the Means Test because that is required by the law (11 USC 707(b)(2)). If you're completing Schedule J, you use your actual numbers (but most use the Means Test/IRS numbers as a minimum). If you go over the minimum, the Trustee will complain and there are some numbers that you just don't want to push.

            Chapter 7 (No Asset/Non-Consumer) Filed (Pro Se) 7/08 (converted from Chapter 13 - 2/10)
            Status: (Auto) Discharged and Closed! 5/10
            Visit My BKForum Blog: justbroke's Blog


            I am not an attorney. Any advice provided is not legal advice.

            Comment


            • #7
              Ok - the pctg = the trustee fee and is a pctg of what? The amt that is being paif to the ........ creditors? wd this also include secured creditors too fo catching up arrears cases?

              Comment


              • #8
                Originally posted by rayrod View Post
                Ok - the pctg = the trustee fee and is a pctg of what? The amt that is being paif to the ........ creditors? wd this also include secured creditors too fo catching up arrears cases?
                The Trustee gets a predetermined fee (between about 4% - 10%) of any money that goes through their system. In most Districts you must pay your remaining attorney fees, arrears on secured debt, and the DMI through the Trustee. The Trustee would take 10% of that amount. In some districts you may be required to pay your regular secured debt payment through the Trustee if you are in arrears. This is typically not an issue because the Trustee's percentage usually comes from the DMI so that the only one affected is the unsecured creditors. In 100% cases, the debtor needs to pay the Trustee's percentage on top of the 100% of unsecured and priority debt.
                Chapter 7 (No Asset/Non-Consumer) Filed (Pro Se) 7/08 (converted from Chapter 13 - 2/10)
                Status: (Auto) Discharged and Closed! 5/10
                Visit My BKForum Blog: justbroke's Blog


                I am not an attorney. Any advice provided is not legal advice.

                Comment


                • #9
                  I can't speak for all districts, but generally, if you are filing chapter 13 bankruptcy and are below median income, you only fill out Form 122C-1. You don't need to go on and do 122C-2. Sounds like you are giving yourself needless headaches. If you are below median, then you stop at with 122C-1 and just fill out Schedules I and J (income and expenses) and use your actual expenses. In chapter 13, you have to pay something. Note, that doesn't mean your actual expenses are going to be allowed, but again, if you are below median income, the trustee is not going to care very much. Your schedule J has to show that you can afford whatever payment you are proposing. It sounds like you are trying to do a chapter 13 without an attorney, that would be a colossal mistake. Don't take this the wrong way, but you are already kinda messing things up and you just at the point of filling out the paperwork. In chapter 13, the petition represents only about 30-40% of the work of the case. To give you some context, if a chapter 7 is like building a 2 bedroom house, then a chapter 13 is like building an 8 plex living unit, and a student loan discharge is a skyscraper. There are bankruptcy attorneys that won't do chapter 13's due to the workload and expertise required to do them well. Do yourself a favor, save the brain damage, the super high risk that you will make a mistake and have to hire an attorney anyway, and get an attorney now.

                  Comment


                  • #10
                    Who used the 2009 figures?
                    --doj bk site, '2. National Standards: Food Clothing & Other Items', for means testing provided by the first commenter above
                    https://www.justice.gov/ust/means-testing/20170501

                    What DMI form?
                    --looking at the next commenter's comment, It wd be form J, Expenses.

                    The Trustee gets a predetermined fee (between about 4% - 10%) of any money that goes through their system.
                    --beautiful . As J carson said: I did not know that. I assumed something else - that it was only on the amt the creditor gets. i also wonder if this was the standard 'fudge factor ' used to modify the appraisal ( i have most often seen 10 pct ).

                    so if it wd suit the debtor better, can he use the pre ordained /census numbers vs acgtual numbners?

                    I asked about whether the debtor had a choice in using actual or census expenses from the DOJ form because in many expenditure categories, I found the census expenses were HIGHER than my expenses from my more ascetic parsimonious way of living. Assuming I can afford it , I probably want those higher expenditures to start w/ (CORRECT?) , especially since I will almost certainly be getting a jjob w/in 5 yrs and I might need more expense to offset this new income? Having a higher baseline wd be better presumably. yes , i have to be able to afford it. Obviously, I well let thE attny figure this out....as long as his or her payment is not too large.



                    ************************************************** ************************************************** ****************************************

                    **************** can ignore the following if you want as it is off topic from the question , but am responding to the off topic comment -- dont take it wrong, I appreciate your input ; trying to clarify **************************

                    It sounds like you are trying to do a chapter 13 without an attorney,
                    -No ,NEIN, nah, nyet, never, nunca wd consider doing this w/o an experienced bk ch13 attny. In fact my leading contender (and see below) is the guy w/ the most nmbr of yrs doing this w/ a DT chciago office. I am assuming he has seen the most variations and pitfalls, but i have talked w/ him too. curiously, he is the only one of the bunch who has not given me a number - i bet ya think I 'd need the number . But he said he cd get my unprotected assets down to almost nothing or next to nothing . he also is the most expensive for upfront fees, and since cash flow is a problem now for a variety of reasons this is one impediment in going w/ this person.

                    that would be a colossal mistake
                    --agreed.

                    Why am I asking these questions? try to reduce assumptions on my part when some term from an attny is said; trying to get a sense of: what is going on , the meaning of some of the terms being said by attnys, and to better assess and compare the advice they have given me ... BEFORE I choose at attny and possibly DURING the process... I alluded above to the fact that some attnys I have spoken w/ have given me sometimes wildly different monthly payments. that is one reason I have to ask the attny ( or in this forum), 'how did you arrive at that?'

                    I have spoken to several attnys on my case for an initial review / consult and there has been significant differences between them sometimes. Some have outright incorrect stuff, too ( said to me by other attnys and from what I understood from my poking around in this and other forums) I wd not have known that they were incorrect if I did nt question stuff.. I am not saying I would be keeping them honest, because that is way too presumptious, but at least I can perhaps better understand them. call me a careful client.

                    the other reason to ask questions and find out more about what is going on is that i hv found that bk is sort of a game of chess where you have to think ahead a bit, and so .... you have to think, and make sure you are following the rules.. one attny said it might be a one year of prep to get things in order. I'd say 5 yrs w/ the knowledge I have gained, but that aint happening now.

                    but you are already kinda messing things up
                    --just asking questions, not filling this stuff out and certainly not filing. not proceeding to the next task; just information gathering. cd I ask too many questions -- yes, I discovered that an attny has a cigarette.

                    get an attorney now.
                    --I'd love to , but which one? ah, that wd require you to know some details ....and I sense you have had quite enough details ....perhaps this is a another thread 'how do you pick a bk attny?' the thing keeping me from pulling the trigger cd be my probably over developed sense of the adage, ' you only get one chance at first impressions' .. so I want to make sure I got the correct attny / APPROACH since it cd lead to door #2 to door#4 to neverland. ( I fear)

                    I already said , possibly in another thread, that some bk ch13 attnys, some VERY popular/successful in my backwater town of chicago, use plain incorrect methods (eg, they drive the ch13 payment from a creditor dividend point of view). how can they do this ? nobody apparently asks questions, I saw their clients in that attny's plush DT location too. after seeing those clients, I think I can see why the clients dont ask questions.
                    Last edited by rayrod; 09-20-2017, 06:23 PM.

                    Comment


                    • #11
                      Rayrod, I know you think you believe you know what you are talking about, but you don't. Especially your comments about attorneys and how the chapter 13 payment is derived. There are 4 factors that go into determining the chapter 13 payment

                      1. Liquidation value: This factor determines the net, "non-exempt" equity assets. If you have non-exempt equity in assets, then your unsecured creditors (Class IV) must receive at least that much. So, regardless of your disposable income, DMI, your creditors MUST receive that amount. This factor is usually not an issue, but it is the one that often kill below median debtors.

                      2. The base payment to creditors. This factor measures what debts MUST be repaid in the chapter 13. Think of things like priority (back) taxes, mortgage arrears etc. Again, regardless of income, this factor sets a base minimum that must be repaid. This one tends to mess up plans for failed business owners. Failed business owners tend to have relatively low income, but high amounts of priority debts.

                      3. Means test. Now we get into the factors based on income and expenses. Basically, the means test is a rote calculation using your prior 6 months of income and IRS allowed expenses to determine what you "should" pay back to unsecured creditors. Means test is an art form.

                      Lastly

                      4. Actual DMI. This is a function of Schedule I and J. This looks at your actual income and projected, actual expenses. Again, doing these forms is an art. NOTE, on these forms, you use ONLY actual expenses. You do not get to claim the higher of the IRS allowed vs. actual (unless it is close). Ultimately, you need to approach schedule J like this...if you had to produce receipts and bank statements for each expense category to prove the expense, could you. That is how you fill out schedule J. An easy example, if your car payment is only $250, you don't get to claim the IRS allowed expense of $450.

                      As for asking questions...you should direct your questions to your attorney. Ultimately, general questions only get you so far. But you are clearly not asking "general" questions seem to be creating a trial petition that you will likely use to compare to what your attorney prepares. I don't know there is value in that as you are creating a predetermined expectation that may be based on inaccurate or false assumptions. Asking question is fine, believing you know better based on ZERO education and experience in the field, is arrogance.

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