To be converted to ch 13

[okane]

You have to have some sort of proof that you have disposable income for the trustee or whoever to convert you to a 13 right?

[HHM]

Yes and no...there are two main factual scenarios that give rise to converstion.

1. (the easy one), the debtor really has disposible income and indicated so on the petition. This usually happens with pro se filers who haven't done their homework.

2. Some of your expenses that you listed are either unreasonable or not allowed. This scenario is a little more common. The prime example is 401K loan repayments, if you are repaying a 401K loan at $300 per month and if by taking that payment away, you would show on your petition disposible income of $200, then yes, you may very likely end up in a chapter 13. (reason being, in most districts, the 401k loan repayment is not an allowed expense).

The trustee usually uses number 2 because its generally a legal question, not a factual one.

[okane]

will they force me to sell my home or dismiss my BK?

Ok how about this. I pay $1074 for a house pmt with a monthly income of $1850. I know I am paying more than 50% of my income toward the house. Will they see this as unreasonable and make me sell my house to do a CH 13 or will they like dismiss my bankruptcy?

[HHM]

Way too many factors to consider to answer your question here. First off, is the $1850 your only source of income, do you share expenses with anyone else.

I have seen cases where if the debtor is paying for too much house (actually, I think someone recently posted a link to a case similar to yours where the debtors were paying 50% of there income on a house and the court said that was unreasonable), but its not that common.

Since were so close to the new law, if I were you, I would start by looking at the IRS tables for allowed housing expenses for someone in your state and with your income. If you under that amount, you may be ok.

[okane]

I did look at the housing and utility chart for my state and county, it says for a family of 3, allowable expense is $1,400 for housing so I am under it but concerned that it will cause a problem because my monthy income is low to have a house pmt of $1074.

[HHM]

Well, I suppose it will depend on how reasonable the expense is given the market in your area, even if you were to move into an apartment, would the payment be much less. If you have a family of three, then at a minimum, you would need a 2 bedroom apartment, what are they renting for? If its significantly less, then you may have a problem

But honestly, I wouldn't worry, with a family of 3 and that income, you won't have any disposible income to be forced into a chapter 13 anyway even if they didn't allow your full housing expense.

[StaciMM]

Also, the other link involved a couple (no dependents) with a house that was expensive in the area they lived, and several acres of land. Their housing was more than 50% of their disposable income, but their income was also much more substantial. I think $60k+ gross...