How is dmi figured

[MELANIE5899]

We are about $3000 below the median income for a family of four so we are considering filing Chapter 7. The question I have is can I still be forced to file Chapter 13 based on my DMI? And when calculating DMI will they use the standard IRS deductions or my actual expenses (as my actual are less than IRS expenses)?

[gmk]

If in any category the IRS expenses are the better number I'd use it. If you feel the IRS standards in any category are too low I'd use your numbers but you should be prepared to provide back up support for your numbers if requested. On my schedule I went over IRS numbers, medical for one, but I had plenty of substantiation.

[MELANIE5899]

Using the IRS expenses we have virtually nothing left over. I guess I have been so worried that they might try to find any reason to force me into Chapter 13. Bottom line is, we are under the median income for our family size with no anticipation of any HUGE increase in income in the near future. Hopefully everything will work out.

[SMinGA]

Schedule J is your actual expenses. Since you are under median, you might not get questioned if you use the higher IRS expenses - but do you want to take that chance? Use real figures, that you can back up.

But if you have been cutting back on necessities because you couldn't afford them - this is the time to stop paying the credit cards and start living in your actual cash budget. Figure out what you need for clothing, vehicle maintenance, etc. Some things you'll need to think about annual totals and divide by 12. Like if you pay a tax/fee to renew your car registration each year.

Also you can assess if there are some things you need to add. Do you have life insurance? If not, this is a good time to get a policy. Do you contribute to 401k at work? If not, and its something you can change then start contributing enough that you get the max match from your employer. What are the deductibles on your auto insurance? If they are $1000, change to $500. These types of changes will lower your DMI, but more importantly will set you up to be on solid ground financially for the long haul.

Then one other area - are there things you've said no to, just due to financial constraints? My son started playing the viola at school last year and we borrowed one from the school. This upcoming year, we are going to rent one from a music store. Its a small amount per month - but the $ will go toward buying one at some point. And the school only has so many to loan out...