Income below the median

[needhelpthx]

Hello,

Quick question:

I was looking at info about the Means test, and I saw that if your income is below the median, that's all I would have to worry about, and I can file CH7. Is this true? Do I have to still account for all my expenses, and have to fall under the threshold to file, or just the fact that we make under the median is sufficient enough?

Thanks!

[dtaild]

Someone can correct me if I'm wrong, but you have to also look at your expenses. Really depends on how much money you have left over for getting a Chapter 7

[AngelinaCatHub]

It is possible to have a million dollars of assets yet be below the median in income. Some C.E.O.'s don't even take a salary. Their income is below the median. You must fill out the forms accurately and honestly to make your new start work. 'Hub

[justbroke]

You still need to worry about expenses! While you don't need to complete the sections of the Means Test that determine "disposable income", the Trustee and United States Trustee (UST) will be looking at your Schedule I and J to calculate what your disposable income is! If it's more than $182.50, you will be denied a discharged unless you have special circumstances.

I will say that the median income was calculated such that the average person's expenses would allow them to receive a discharge in a Chapter 7. There are very few under-the-median income filers that are denied a Chapter 7 discharge.

[needhelpthx]

Thanks for the replies. I knew that I would still have to account for all my expenses, but was just only wondering if the "threshold factor" still applied since I'm below the median. Sorry if I wasn't clear on that.

Good info, everyone. Thanks!

Research goes on...

[needhelpthx]

A couple more quick questions.

The $182.50 threshold amount, does that apply to me and my wife, even though I'm the only one filing, or does that just apply to me?

Can the $4000 wildcard by applied to the equity we have in the house, because we're pretty close to the edge of the $15,000 exemption? And do they go by actual comps, or do they go by the county's "assessed" value?

Thanks, guys!

[ccsjoe]

A wildcard is a wildcard and can be applied to anything. If your state has any restrictions on the application of the wildcard it should be readily identified when you look it up. As far as home value, it depends on the trustees in your district. From what I have seem most will accept even a zillow or other comp-related printout. I have not yet heard of one requiring the county assessor's estimated value.

I'll let someone with more knowledge of single vs. joint filing reply to the 182.50 amount, but can tell you that amount is not a magic number, trustees can look into CH13 if you're around 150 or so from what I've heard, also very much at discretion of trustee, so a lot of subjectivity, not objectivity. Your biggest magic number concern is going to be on Schedule J though. As long as you pass the means test, I'd focus on schedules I and J.

[justbroke]

The $182.50 threshold amount, does that apply to me and my wife, even though I'm the only one filing, or does that just apply to me?

It applies to your "household" income.

Also, someone mentioned that the $182.50 is not a hard and fast rule. If you have unsecured credit that is more than $10,950 then the $182.50 is the rule. I didn't want to get into the other "abuse" threshold, but the first threshold is actually at $109.58. However, the lower abuse threshold is moot once you have more than $10,950 in unsecured debt. This is why I never mention the lower amount because it's usually not a factor. However if your total unsecured debt is less than $10,950, then your disposable income can't be more than 25% of 60 times your disposable income.

Can the $4000 wildcard by applied to the equity we have in the house, because we're pretty close to the edge of the $15,000 exemption? And do they go by actual comps, or do they go by the county's "assessed" value?

Since you're in Indiana, the exemption structure is different. To the specific Indiana $4,000 wildcard exemption, it actually reads that it can be applied to any real estate or personal property. So, you can combine that with the homestead exemption. Please speak with an attorney though, it appears, on the surface, that these values may have been doubled in either 2008 or 2010 and the homestead exemption is now $15,000 and the wildcard is now $8,000. Also, if you're filing together, you may be able to double the $8,000 so you'd have a $16,000 wildcard.

[justbroke]

However if your total unsecured debt is less than $10,950, then your disposable income can't be more than 25% of 60 times your disposable income.

I need to make this clearer. When multiplying your disposable (monthly) income by 60, that amount can't be more than 25% of your total unsecured debt, which is $43,800.

So, the unsecured threshold is really $43,800... should your disposable income exceed $109.58 and is less than $182.50. My apologies on the confusion I'm sure I caused.