Means Test Question

[javaman]

Even though my income is below the median for my area, is it true that I could be forced into Chapter 13 if I have too much disposable income? I have seen some calculators on the web that would suggest that if you are below the median, the test is over. On the other hand, I've encountered other information that was suggest otherwise. Which is correct?

[lrprn]

Even though my income is below the median for my area, is it true that I could be forced into Chapter 13 if I have too much disposable income? I have seen some calculators on the web that would suggest that if you are below the median, the test is over. On the other hand, I've encountered other information that was suggest otherwise. Which is correct?

If you have sufficient disposable income (typically more than $160/month), this indicates you may be able to pay your creditors back at least as much as they would get in a Ch 7 and can support a Ch 13 plan. In this circumstance, the trustee is going to do his/her best to push you into Ch 13.

If your disposable income is between $100-160/month, then the trustee will look at your numbers on the schedules very closely to decide whether to push you to Ch 13 or allow you to file Ch 7.

If you show less than $100/month disposable income, then Ch 7 is pretty much a certainty.

You can thank our 2005 Congress men and women for voting for this ridiculous and shameful numbers game.

Since your income is below your state's median, it's very likely that you will be able to file Ch 7.

However, in some unusual circumstances when a debtor's last-six-months income indicates an annual income below but close to the state median, it is not a given. In that case, a qualified professional completing the means test can tell the debtor whether they qualify to file Ch 7 or not.

[SinkingFast]

We haven't heard anyone posting on the Forum here that's been below the Median and forced into Ch 13.

Generally speaking, when you're below the Median, you use Means Test Form B22A. Go to Lines 13 and 14 where actual Earned Income is compared to the Median Allowed for your State. If you're below the Median, on Line 15, the box for "Presumption does not Arise" is checked and the Means Test is done.

Then, the focus moves to Schedule I vs Schedule J. I is actual earned Income. J is your actual living expenses. If you have significant disposable income left there, you could be forced into Ch 13. It is possible.

If you don't have a good fix on your actual living expenses, I'd suggest you start saving receipts. Go back over your Bank and CC statements and look at where you've spent money. Pull out your insurance bills and any other 1x or 2x a year type bills you pay. Think about how much you've spent for car repairs, doctor's office visits, medical procedures and prescriptions over the last year. Start adding all that stuff up and divide by 12.

Here's a link to an Expense Calculator to help jog your mind about things you may not think of:

http://www.ca-bankruptcy-attorneys.c...alculator.html