Payment Calculations

[coopersmydog]

I've been reading the judges opinions in my district, and it seems that both he and the bankruptcy appeals court have decided that the 22C (means test) for is the deciding factor for determining payment amounts to unsecured creditors.

On for 22C I understand that I am allowed to use a combination of national and local standards, depending on the expense, and actual expenses for "other" expenses not covered by the standards.

When I use these expenses I have a negative disposable income. How does that work. I'm above the median income, and my first lawyer consultation said that I'd have to file 13. I'm going to see a couple more lawyers, but I'm just trying to understand my options.

[justbroke]

Excellent! if you have a negative disposable monthly income (DMI), that is the first part of a two-part test on whether you need to pay the unsecured creditors any money.

The second test, is if you have any non-exempt property with equity and other liquidity that, had you filed Chapter 7, could be used to pay off unsecured creditors. if you don't have any of that, then you pass the second test!

If you pass both tests, then you don't pay the unsecured creditors a penny. You will have a 0% plan.

But wait, there's one more exception. Some Districts don't allow 0% plans. So, that could cause an issue.

However, let's assume that 0% plans are okay in your District, and that you have a negative DMI and are basically a no-asset case (no equity or exempt property).

[NEWBIE911]

Excellent! if you have a negative disposable monthly income (DMI), that is the first part of a two-part test on whether you need to pay the unsecured creditors any money.

The second test, is if you have any non-exempt property with equity and other liquidity that, had you filed Chapter 7, could be used to pay off unsecured creditors. if you don't have any of that, then you pass the second test!

If you pass both tests, then you don't pay the unsecured creditors a penny. You will have a 0% plan.

But wait, there's one more exception. Some Districts don't allow 0% plans. So, that could cause an issue.

However, let's assume that 0% plans are okay in your District, and that you have a negative DMI and are basically a no-asset case (no equity or exempt property).

Is there a list of districts that do and do not allow 0% plans? My lawyer had to make me show a positive DMI - (I was negative). He said it must be in the black for the plan to be effective.

[optimistic1]

Is there a list of districts that do and do not allow 0% plans? My lawyer had to make me show a positive DMI - (I was negative). He said it must be in the back for the plan to be effective.

I would guess, that would be for paying your attorney, and the trustee fee, depending on how little he made your DMI be. But everyones case can be so different from one another. I dont think you can have a Ch. 13 plan, and pay 0. And in order to pay something into, your DMI must be positive.

[justbroke]

I would guess, that would be for paying your attorney, and the trustee fee, depending on how little he made your DMI be. But everyones case can be so different from one another. I dont think you can have a Ch. 13 plan, and pay 0. And in order to pay something into, your DMI must be positive.

It could be a District thing if your DMI has to be positive. My District ahs no such restriction... as my DMI is negative. While I don't pay a lawyer, I have $500/month in Trustee fees.

As written, it just varies so much by District and there is no list of which Districts require positive DMIs.

There are even Districts which won't let you fund a plan unless you pay unsecured creditors 10% or more.

It just varies.

[sassiebaz]

Is it a possibility that if someone's disposable income was only say, $200 a month....that would be sufficient enough to file a 13? I just see so many other's paying hundres and even thousands a month. We probably only have a couple hundred dollars of disposable income.....

[justbroke]

Is it a possibility that if someone's disposable income was only say, $200 a month....that would be sufficient enough to file a 13? I just see so many other's paying hundres and even thousands a month. We probably only have a couple hundred dollars of disposable income.....

I think you may be confused between the disposable monthly income (DMI) -- which goes to unsecured creditors -- and a payment to the Trustee.

The DMI is what's left after you pay all your secured creditors, trustee, lawyer, taxes, arrearages, etc. This is usually (generally0 a small number in the hundreds.

When you look at my large monthly payment, that includes my payments for my first mortgage, two cars, arrearages, IRS taxes, etc. It's c combination of my DMI and what I'm paying to all the secured creditors.

So, the payment to the Trustee isn't the same as your DMI.

Understand now?