What if you have NO disposable income?

[chaostheory]

My husband I are planning on filing for BK asap. We met with a lawyer yesterday but we were very rushed and left with more questions than answers.

We have $107,000 of unsecured debt. We own two vehicles with a combined value of $11,000. We also own a small portion of his aunt's house through her trust. She has been deceased for 2 years. We live in the house and pay rent to the trust to reduce the amount owed on the equity line and to hope the housing market improves.

The lawyer said we cannot keep the vehicles if we file for chapter 7. We have one nice van worth $11,000 and one junker car worth $1,000. We're willing to get rid of the junker but it's not enough. So to keep the van and our share of his aunt's trust we need to file chapter 13. And the only way we can keep the share of the trust (valued around $35,000) is we can claim a homestead exemption since we live there.

Ok, I kind of understand all of this. But we have 4 children and earn well under the median income for our state (CA). I also have a lot of medical issues so I have high co-pays every month. We have taken the Bankruptcy Means Test Calculator over on legalconsumer.com several times. After putting in all our numbers it keeps telling us that we have NEGATIVE disposable income each month. Basically it told we can pay $-1500 each month to our unsecured debt and that we'll end up paying a total of $-90,000 over 60 months. What!? Does that mean we aren't eligible for Chapter 13?

I am so confused and could use any help clarifying things for me and my family. Thanks in advance

[dallas]

Did the attorney tell you what you amount might be on a payment plan IF it can happen???Good luck to you

[chaostheory]

She said probably %5-%10 percent. And then she said $100-$200. Who knows? We were SO rushed. Ugh.

[optimistic1]

Check this recent post with the same question,

http://www.bkforum.com/showthread.php?t=42770

Also, if you use the search function,

http://www.bkforum.com/search.php

try typing in NO DISPOSABLE or NEGATIVE DISPOSABLE into the search parameter.

You will find lots of posts about the same question, I myself have posted this question, and the easy answer to your question is NO, just because it says you have negative disposable income does not disqualify you to file, it is a matter of income minus your expenses, and what really needs to be paid into your plan based on your type of debts, assets, etc.

[Billssuck]

I too was under the median income and had a negative DMI and we filed CH13. As you can see from my signature, my payments are really minimal to discharge my debt (same as you...$107k...funny). Like you, we had a car that wouldn't be exempt (although I was okay with giving it up if necessary to file ch7) but our home was another issue and having an adult son at home would be litigated. Also, I am paid a business expenses each month and that would be scrutinized under a ch7 as well as my high mortgage payment. Anyway what I am saying is that we had reasons why a ch13 was better for us and we were able to qualify for it with a negative DMI. We just cut back expenses and made it fit. I am on my second month of my payments and so far so good but things are tight.

Oh I might point out that if you are under the median, your plan period will be shorter than 60 months and most likely 36 months like mine. It will just matter on the calculations...

The calculator for the monthly payments being a negative each month doesn't necessarily mean a disqualification. It's just doing the math with a negative DMI; I wouldn't pay any attention to that; that's what it did for us too...Good luck!