Disposable Income?

[cathywhite4495]

I'm reading other posts about disposable income and getting nervous. I am well below the median for my state (less than 1/2) but when you take away my dischargable debt, I do have some money left over. I would have to pull out my schedules to be sure, but I think it would be in the neghborhood of $400-500 a month. However, I have student loans that come out of deferment in November and that will take a good chunk of the leftover money. I did put a note on my Schedule for the trustee saying that I would soon have that expense. BUT, is there any chance that they would shove me into a 13? I tell myself no because my income is so far below the median and I will soon have the extra expense but then I start worrying and panic myself.

[freshstart06]

$400-$500 is a lot (you can be pushed into chapter 13 is you have $100 left over), it does not matter if you under the median they look at schedule J as well. Hmmm, I know it is too late but did the paper you submitted show disposable income of $400-$500??? if not, you may be okay but you did, Yes, there may be a problem. When you get a chance pull out your schedules and find out how much you have left.

There are cases where people way under the median that have to convert or get dismissed because they have disposable income. For this reason it is advisable that everyone do the means test even if you are under the median.

More experience BK posters can explain better

[lrprn]

I am well below the median for my state (less than 1/2) but when you take away my dischargable debt, I do have some money left over.

[cathywhite4495]

I didn't have to do the means test since my income was so low. Schedule J was the one showing the extra income. I do have the upcoming change of the student loan payments. I also haven't been able to ever contribute to my 401k because I couldn't afford it and I was going to enroll in it next week (next open enrollment cycle).
I wasn't too worried about the extra amount because there was a spot on the bottom of the schedule to fill in any expected changes and I put the student loan payment. That should be about $300-400 (I owe a LOT in loans).
I hope lprn has the right answer on this one

[freshstart06]

lrprn, you have been around longer so you seen a lot of cases, but I was told from a lawyer even if you below the median and if you have a lot of disposable income it can still be considered abuse. I hope I am wrong in Cathy's case, I don't want anything to go wrong in cathy's case. Cathy if you can see if you can get free advice and find the answer.

I know if you are at the median or over and have even $100 disposable they can claim abuse so I would assume if you are under and have $400 disposable that will still apply, for this reason they tell everyone to do the means test regardless and do the schedules.

Cathy you can always amend your schedules for your benefit and in some cases the trustee will tell you to amend and add expenses to your schedules. My trustee wanted me to add all my medical expense no matter how high.

Cathy I think you will be okay, you have dispsable income because you are not living above your means. You know you don't make a lot of money and you are not abusing the situation, this is good. It is true, the trustees do not like to see negative or someone under the median with a lot of debt. You may just want to rearrange the numbers to show like $200-$150 disposable in this case when it is time to pay the student loans you will break even.

Do a google on this topic and call around for free advice on this one, you can't take a chance.

[danaf]

lrp - not challenging you but I too was told the same thing by a lawyer, that if I have alot of disposable income (without unsecured) that I could be pushed into a 13.

However, perhaps this lawyer didn't know what he was talkin bout.

[freshstart06]

Cathy you may want to amend you schedules or do the means test for yourself. I found this quote on the internet. See the courts know if you are low income, with student loans you will only have to pay between $25-$50, they will work with you. So consider that as well. Make sure if you amend do it before the meeting.

"Even if your median income is below the state's median, but you can pay 25 percent of your unsecured debt, the court can require you to file under Chapter 13 if it believes that you would abuse the system by filing for a Chapter 7."

for example if your disposable income shows that you can repay 25% of your undsecured debt you can be forced into chapter 13 regardless if you are under the median. This is way, they tell people under the median to do the means test anyway to make sure. Since you are under the median it is easy to play around with some numbers and expenses and make that disposable income go away. The safe disposable income is between $0-$25. Don not go negative if you can help it and darn sure do go pass $100

sadly, being under median only means you "can" file chapter 7 it does not guarentee that you will get chapter 7. for people over the median we have to "qualify" for chapter 7 by taking the means test.

[cathywhite4495]

Thanks for all the advice! I think I will do the means test anyway and maybe a new Schedule J with the student loan amounts added in. My pacer account lists as no presumption of abuse but I haven't had the 341 yet. I have been living very frugally these past few years and tryng to pay stuff off. I read somewhere to put down numbers for what you would actually spend if you didn't have all the old debt. I'll have to check my numbers again.
There are only 2 lawyers in my area. One is an idiot and the other one is booked until the middle of September. I had to file pro se because I can't afford the attorney's fee. I have no family to help me. It's just me and my boys. My ex-husband had a big hand in all these debts but they were all in my name so I'm stuck with it. I've been holding on for 5 years trying to take care of things and avoid bankruptcy.
It stinks - we've been barely getting by forever and if they tried to put me into a 13 I would have to live like this for 5 more years - I don't think I could take it. I'm already constantly worrying about putting food on the table and just basic living. I seriously don't think I could do it. I do appreciate your help but I have to say I feel like I'm sunk now. I'll do the changes but I don't have high hopes.

[freshstart06]

cathy, I know you will be okay just amend the schedules so it does not show so much disposable. You are way under so that helps but the $400-500 extra left doesn't, just play it safe

[cathywhite4495]

Do you think I could put the student loan payment on the schedukes even though they haven't started yet? I checked and I have to start paying in December. If I do put it on, which payment plan should I use? I plan on doing the income contingent plan - I just ran the numbers and my payment will be $222 which would still give me too much extra. If I do the traditional plan, the payments would be over $1,000 which would put me negative. The final option is a graduated plan where I would pay $584 (just right).
I could also buy insurance through my job ($500/month) and that would take care of the extra, but I still qualify for the state insurance which only costs $10 a month and gives much better coverage. Of course, if I buy the insurance, I won't be able to pay on my student loans and would have to request another year of deferment. I'm not sure if I would get it or not.

[reallynervous]

lrprn,

I hope you will come back to this thread and clarify what you are saying about Ch & filers and disposable income. I thought that if one qualifies as able to file CH 7 without a presumption of abuse (ie under the median income), they could still be put into a CH 13 plan if they have disposable income in excess of $100 or so based upon a Schedule I vs J comparison.

Is that incorrect?

Also, it is my understanding that the further completion of the means test won't necessarily tell you if you will have disposable income as your trustee may not allow the full amounts of expenses the means test uses. It must be based upon actual expenses (with some understanding that the lawyer knows what will be acceptable, ie they said we should put $50 per month in clothing for each of us - that is what is allowable here.)

So, am I understanding it all wrong? Now, I am confused. Thanks so much for any clarification you can give to us.

reallynervous

[SinkingFast]

We were below the Median.

Our attny stopped on the Means Test as Line 15. Checked the box for "Presumption does not Arise".

On Schedule J, our attny showed us +$11/month.

In our Court here, any one over +$100/mo is strongly scrutinized for Ch 13. Below the Median or Above the Median.

Cathy,............

Don't fool with redoing the Means Test. Go back and amend your Schedule J. On the day you filed BK, you were contractually liable for those Student Loan Payments. So it's not like you're adding in a future expense. Be sure to call and get an accurate figure for what those payments will be when you start making them again.

I'd also venture to guess you simply "forgot" a lot of routine expenses. Or, you've grown so used to living on the cheap that you didn't allow yourself enough money in some areas to live decently well.

Refer to this BK Expense Calculator and see if you might be missing some items:

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

Did you add in for Entertainment?? A decent amount/month for clothes?? What about occassional expenses that only pop up once or twice a year. Did you remember to add in for those??

[freshstart06]

reallynervous our assumption are correct. I just would not chance $400-$500 of disposable income even if I was 90% under the median.

Sinkingfast is correct, I would not mess with the means test just correct the schedules, if you search hard or look around you will think of extra debt.

[cathywhite4495]

I'm going to redo my Schedule J. I have been so used to living cheap that I didn't put down as much as I could. I hope the trustee doesn't give me a hard time about the changes.
I can choose from 3 different options for my student loans. It's like The Three Bears - one is too high, one to low and one just right. Would I be wrong to put down one of the higher payments and then choose a lower plan when the time comes?
I appreciate you guys answering this income question. It would have been horrible to not see it until the 341!

[cathywhite4495]

SF - excellent link! Thanks, there was a lot on there I hadn't thought of. Can I put cable down even though it's currently disconnected and I don't really want it back on? It was disconnected right before I filed.