filing ch 7 with income above the median

[maddog2112]

Has anyone out there filed ch 13 with income above the median who owned a home and maybe a car payment? Were you able to keep the house and car? I was told by a lawyer that even though you are above the median, once expenses are taken out including house and car payments, if nothing was left over to pay you could file ch7.

[outsidetool]

It is true that you can be over median and file ch 7. However, lots of things come in to play. I guess a lawyer telling you that you could file a 7 if you had no money after 'expenses' would be kind of on track. There's a 'means test' you have to wade through which essentially irons out whether you can file a 7 as far as your income/expenses go. Some lawyers are better than others at playing with the numbers regarding the means test.

[amalejko]

I am over the medium and have filed chapter 7. It depends on the amount of unsecured debt you have in comparison to your income, how many family members you are supporting but in the end how much money you will have left over from your paycheck after you pay any debts that you keep such as your house, cars etc but you have to be able to pay all the debts you intend to keep i.e. if your mortage and car loans plus monthly expenses exceed your income, you cannot do chapter 7. Ours came within $100.00 and we have a combined income of $100k, no kids.

[maddog2112]

amalejko, sounds like you had a lot better lawyer than me. I could have been in a very similar situation as you, but instead ebded up with a 75% payback 465.00 weekly. Did you have to give up any assets? My mortgage second and car payment are outside the 13 and all payback is 120K unsecured cc`s.

[Rick9972]

I also am over the median and my lawyer said that it basically boils down to type of debt on whether or not you get a 7 or a 13. Alot of secured debt and small unsecured leads to a 7. A lot of unsecured debt almost always leads to a 13.

The magic unsecured amount seems to be @ 100k. He further stated that anyone with over 100k unsecured gets looked at by all the trustees. (Whatever that means)

It really depends on how good a lawyer you have.

[outsidetool]

I'd agree it's all about your lawyer. I met with 4 of them before I found one that agreed that I could file a 7; the first 3 just looked at me and said I had to be in a 13. I'd already done a little leg work myself, including looking on this forum, and pretty well knew I could do a 7, just needed a lawyer who wasn't trustee-shy. I found one who actually loved to shove borderline cases in to a 7 and loved to do battle with the trustees. There were some intense moments--but he held his ground and it all worked out.

[maddog2112]

outside tool, were you above the 100k unsecured threshold?

[amalejko]

I have 270 k in secured debt and 96k in unsecured. We wanted to bankrupt the second mortgage as it is an SBA loan and the payments are 2k a month so between the two mortgages we pay 3400 a month. We could not bankrupt the 2nd mortgage and still file chapter 7 so we stated we are reaffirming the two cars and the two mortgages but our lawyer said we will not reaffirm anything in the end. The SBA has a lien on our home and so they will eventually get paid and we are selling our home and moving once the bankruptcy is discharged.

[HHM]

Don't come away with the wrong idea. 8 times out of 10, being over median is going to land you in a chapter 13 and there is nothing a good lawyer can do about that. Most people who file chapter 13's either need to be in chapter 13 or legitimately don't qualify for a 7.

There are really only 2 ways around the means test...
1. Non-consumer BK 7. The majority of your debt (all your debt, home mortgage, car loans, CC's etc) is business related.
2. Notwithstanding being over median, you don't have money left over at the end of month. The primary cause for that are high secured debt (mortgage etc). But the wink-wink-nod-nod test is that the expenses still must be reasonable.

Also, the amount of unsecured debt is actually irrelevent to the analysis.

This is one of those unintended consequences of BK. It allows those that got into too much house (i.e. high mortgage payment) to file chapter 7 while punishes those that made relatively reasonable buying decisions when it come to house and cars by forcing them into chapter 13.

Maddog, if you paying back $120K in unsecured debt in your plan, there was no way you were going to be chapter 7, don't lose sleep over it.