"Debtor could reasonably be expected to reduce living expenses"

[alorth]

Are you saying you are 2 times median income, or your mortgage is 2 times the IRS allowed expense.

If the prior, then 2 times median income is a BIG PROBLEM, no way you are doing chapter 7. You may have some special issues, but still, something is way amiss on your budget. I don't know that BK is your option, you may be more of a Dave Ramsey Total Money Makeover solution.

We actually came VERY close to a Chapter 7 with an INCOME 2x median.

The Means Test was initially passed under the "Disposable Income was less than $190/month and repayment under a 13 would be less than 25% of debt".

BUT....a mathematical error was just discovered in the test that now has us slightly OVER that mark, and it does look like we will need to convert to a 13. The YTD totals on the checkstubs didn't match the totals if you added each checkstub individually!

The difference was roughly $600/month. OR....essentially, ONE check somehow didn't make it on the accumulative total over the 6 month YTD figure. It made all the difference between a 7 and a 13.

So any chance of a 7 is out the window, and we aren't going to fight the Pres. of Abuse....especially seeing the error is on our end.

But it was soooo close.

Now we have to figure out how a 13 plan will work.

[alorth]

Medical expenses are high. We blow right through the $2600 cap on our Health Spending Account in 7-8 months....the rest is out of pocket. Preschool/Daycare costs for our 4 yr. old are around $570/month....AND I am watching her most of the time myself....but she does have pre-school 5 days/week at Montessori. So the out of pocket health costs plus the child's school/care costs are 2 big hits we take. Then add the Mortgage of $2410. Payroll taxes eat over $2200/month. Car payments are 210 and 270 for an '09 Hyundai and an '05 Chrysler. There is 401k loan payback of around $400. Car insurance has gone up thanks to bad credit. It all adds up, folks. Grocery and gas expenditures have increased simply as a by-product of the economy. People...I still wear some clothes that are 10-15 years old! We still watch old tube-style TVs in our home, except for one 5 yr. old flat screen. No boat, no 3rd car, no vacations, no motorcycle, no jewelry. We keep getting odds and ends repairs on the cars, or the house. I don't even have a cheap swingset for my kid in the backyard...something I have desperately wanted to get for her. I'm not talking one of those big Wooden $2500 Play structures, either. Just a cheap, plain swing set. Its just life....eating us a small bite at a time.

(edit to say: This doesn't take into account utility costs, either, which have also been going up)

(edit again to say our monthly obligations on the Means Test total close to $9200/month.....Our Means test initially showed income of $9360....that was an error and it is actually at about $9950....that is all the difference it took to go from the possibility of a 7 into a 13)

[AngelinaCatHub]

Are you saying you are 2 times median income, or your mortgage is 2 times the IRS allowed expense.

If the prior, then 2 times median income is a BIG PROBLEM, no way you are doing chapter 7. You may have some special issues, but still, something is way amiss on your budget. I don't know that BK is your option, you may be more of a Dave Ramsey Total Money Makeover solution.

That is what I was getting at, but you said it better. Dave Ramsey is good. However when you have no job or a fixed income, sometimes BK is the only solution. DR sees no reason at all to BK and I disagree with that. There are more reasons for BK than just financial relief. For some a new start is a new life, and can save a marriage and sanity at times. 'Hub

[HHM]

Are you saying you are 2 times median income, or your mortgage is 2 times the IRS allowed expense.

If the prior, then 2 times median income is a BIG PROBLEM, no way you are doing chapter 7. You may have some special issues, but still, something is way amiss on your budget. I don't know that BK is your option, you may be more of a Dave Ramsey Total Money Makeover solution.

[AngelinaCatHub]

Being totally objective, your wife makes good money, but you cannot pay your bills. Are you current on the mortgage? Why are you filing for BK? You can't pay your bills due to not enough money. What besides your obligations and/or utilities is eating your income up? This is what the UST is asking. The presumption of abuse is triggered by numbers only. As looking into what little info you have supplied, I am looking as if I was a UST and asking this question. SO, you must come up with a satisfactory answer to explain the no money part.

Don't misunderstand, I'm on your side, but projecting this puzzle as the Trustee may see it. 'Hub

[IamOld]

Do you think you'll be challenged? Does your atty think so????

And what I still don't understand is this - ok so you move out of the house right? So you can pay back creditors thru a 13 - BUT doesn't that mean that the SECURED creditor of your house get screwed (so to speak???)

[alorth]

The more I look into filing a debtor's Rebuttal of the Presumption of Abuse, the more discouraged I get.

Apparently, the rebuttal is limited to some things called "Special Circumstances", which the Gov't. mainly limits to either a Major Health Issue, or Call to Active Military Duty. I don't know if my Health Issue would qualify, but especially since my wife's income is still there, and is still substantial, and is still almost 2x median.

One answer I read in Case Law was "Debtor could reasonably be expected to reduce living expenses" in the case where a high mortgage payment was limiting the ability to formulate a re-payment plan under 13. The petitioners had offered the high mortgage payment as necessary and a "special circumstance", which the judge denied (this was in Texas).

So am I to assume the UST and Judge will just determine the Totality of Circumstance is such that we should be expected to reduce our living expenses, but that they don't care if its really possible, or HOW it should happen, just that it should happen?!

Nice mess.