Must be able to pay 25% of debt to be forced into chapter 13?

[TXskyblue]

Ch7, over median with high expenses, had 341 with no issues, waiting out 60 days.

Correct me if I'm wrong, but is it true that you must be able to pay at least 25% of your debt to be forced into a chapter 13?

Say I owe $80,000 in credit card debt. 25% is $20,000. $20,000 divided by 60 (for 5 years) is $333. Therefore, even if the UST wants to contest some of my expenses, he'd still have to get me positive at least $333 to object to my discharge and force me into a 13.

Am I understanding this correctly? So even if he could put me positive $300, there would be no grounds to object because I would still not be able to pay at least 25% of my debt?

This seems odd to me in that a debtor with higher credit card problems would be discharged while someone who, for whatever reason, didn't get themselves in as much debt would be forced into a 13.

[justbroke]

Correct me if I'm wrong, but is it true that you must be able to pay at least 25% of your debt to be forced into a chapter 13?

There are two tests on the Means Test. Well, actually 3 but we'll talk about the two threshold tests. The first is whether the disposable monthly income (DMI) x 60 is more than $12,475 over the 60 months period. If your DMI is greater than about $208/month ($12,475/60), then you HAVE the means to return a dividend to the unsecured creditors. The 25% test does not matter.

The second test is when your DMI is between about $124 and $208/month. That second test is the 25% test. So, if your DMI is $200, then your unsecured credit balances need to be less than $48,000 ($200 x 60 = $12,000 x 4 = $48,000).

Say I owe $80,000 in credit card debt. 25% is $20,000. $20,000 divided by 60 (for 5 years) is $333. Therefore, even if the UST wants to contest some of my expenses, he'd still have to get me positive at least $333 to object to my discharge and force me into a 13.

No. The maximum DMI is $208/month PERIOD. The special test case is if your DMI falls between $124 and $208/month. The test is based on the DMI, so you need to calculate the DMI first using the Means Test. Then you compare the DMI to the threshold first ($208/month). if the DMI exceeds $208, then you "have the means" to fund a Chapter 13. If the DMI is less than $124, there is no need to continue. If the DMI is between $124 and $208, then you multiply your ACTUAL DMI by 60 to see if that amount is greater than 25% of the scheduled unsecured debt. If it is greater than 25%, then you ahve the means to fund a Chapter 13.

Am I understanding this correctly? So even if he could put me positive $300, there would be no grounds to object because I would still not be able to pay at least 25% of my debt?

See above. You are not understanding the Means Test. There is a hard limit of just under $208/month.

Also remember, that it is the job of the United States Trustee (UST) to make sure that your means test is accurate and that it meets the code. If they find something within 10 days of your 341 Meeting, the UST would typically file a Presumption of Abuse.

[TXskyblue]

There are two tests on the Means Test . . . The maximum DMI is $208/month PERIOD. . . If the DMI is between $124 and $208, then you multiply your ACTUAL DMI by 60 to see if that amount is greater than 25% of the scheduled unsecured debt. If it is greater than 25%, then you ahve the means to fund a Chapter 13.

Also remember, that it is the job of the United States Trustee (UST) to make sure that your means test is accurate and that it meets the code. If they find something within 10 days of your 341 Meeting, the UST would typically file a Presumption of Abuse.

Ah, that makes a lot more sense. I was completely misunderstanding how it worked.

I now see that my scheduled unsecured debt is high enough that I would be subject to the $208 limit.

My DMI is something like $5. UST would have to assert that a little over $200 of my expenses are objectionable before a 13 would come into the picture.

My 341 was > 14 days ago and there is nothing from the UST. Only the trustee's standard sign-off as no-asset.

Thank you for taking the time to explain all that. I feel better knowing how it works. I had it all mixed up.