analysis of the means test

[LostOne0069]

Anyone have examples of these budgets? I spoke to the lawyer and he flat out said "forget chapter 7, you'll have to do a chapter 13 with a 5 year plan" This is about as bad as I can imagine having to do. I mean, I don't mind paying back the creditors... I really wish I could have avoided having the problems entirely! Unfortunately I'm in a position where I have about 100k in credit card debt, rent of $1650/month, a $690/month car payment, a $223 boat payment... both of which are at about break even as far as what they are worth compared to what I owe... and no other assets.... I've sold off everything else over the last year or so to keep afloat.

Even with a family of 6 (4 kids) he felt that I'd have to do the chapt. 13 with a 5 year plan... and pay between $500 and $1000 per month on that plan.

Really the biggest thing that bothers me with this... is that we can't even THINK about buying a house for 5 to 7 years... not to mention we have one vehicle for a family of 6... so my wife and kids have no transportation while I am at work and if/when my vehicle breaks down... I can't get to work.

Please... someone tell me they've invented a time machine so I can go back 10 years and cut up my credit cards... please!

ugh... the things you do to yourself. I can't even blame this on medical bills or anything reasonable... just pure bad choices and stupidity.

I can only say that I have the greatest wife in the world.... whose only comment was, "well, then we have plenty of time to decide what we want the new house to look like, don't we?" and then gave me a hug and said it would all be ok.

[bkfiler]

you need to keep making more appt with attorneys. they are free and very helpful. that is the first step.

[bkfiler]

in the meantime start filling this out

http://www.ca-bankruptcy-attorneys.com/calculators/expense_calculator.html

it will help you see what your expenses are and can help the attorney speak with you regarding your own case more informatively as well.

[LostOne0069]

in the meantime start filling this out

http://www.ca-bankruptcy-attorneys.com/calculators/expense_calculator.html

it will help you see what your expenses are and can help the attorney speak with you regarding your own case more informatively as well.

That's a great page... but now I'm wondering what's allowed... I mean, I gave the attorney what or expenses were... and it added up to within 100 of our net take home pay... and he said, well, the judge will object to this, that, that and this and you'll never get it through... especially since you want to keep your vehicle.

I mean... is it possible for someone with a $90k/year income to get a chapter 7? From what this attorney said it's not going to happen.

[bkfiler]

you will need to be under the median income for your area to qualify for a chapter 7.

http://www.usdoj.gov/ust/eo/bapcpa/meanstesting.htm

[bkfiler]

Means test: Bankruptcy reform establishes an income-based "means test" to see if a debtor qualifies to have some or all debts wiped away. The test determines if a debtor can file for Chapter 7 bankruptcy, which erases almost all unsecured debt, or Chapter 13 bankruptcy, in which the debtor repays some or all debt under a repayment plan that lasts from three to five years. Or, the court could order a debtor to pay bills as promised.

Ten percent to 13% of bankruptcy filers have been taking advantage of the system. (lol i love how they slipped this into the article )

Under the means test, if you have more than $100 a month left after paying approved expenses (no cell phones, restaurant meals, or movies (oh BS! ) ), you will have to file Chapter 13 bankruptcy vs. Chapter 7 bankruptcy. The means test uses Internal Revenue Service living expense standards to determine which bankruptcy filing a debtor is allowed.

The majority of people who seek bankruptcy--because of job loss, medical problems, divorce, and other personal problems--will be unaffected by this provision. Less than 10% of the people who file for bankruptcy will have trouble meeting the "means test." But because more than one million people file for bankruptcy each year, a large number of people may have the means to repay at least some of their unsecured debts in Chapter 13.

And even if the test shows that bankruptcy relief under Chapter 7 is not necessary, the person filing may be able to show why special circumstances justify a higher expense allowance. That would enable the consumer to file Chapter 7.

[StaciMM]

What areas did he say would be an issue?

If you have a small family, on $90,000/year it will be VERY difficult to do a ch. 7. The exceptions might be if you have to pay a decent amount to child support or student loan payments, or have a good amount of ongoing medical care each month. Otherwise, the court will argue that you can cut back on some of your expenses, cutting out things that aren't necessary, and have some money to repay at least in part to your creditors.

If you have a large family on $90,000 per year, things will have a better chance-but it will still be an uphill battle.

That's a great page... but now I'm wondering what's allowed... I mean, I gave the attorney what or expenses were... and it added up to within 100 of our net take home pay... and he said, well, the judge will object to this, that, that and this and you'll never get it through... especially since you want to keep your vehicle.

I mean... is it possible for someone with a $90k/year income to get a chapter 7? From what this attorney said it's not going to happen.

[LostOne0069]

We're a family of 6 (4 kids), I have the only income, we homeschool our kids and so all schoolbooks etc. come out of our pocket. As for the median income... for a NJ family of 6 the median income is $101k, so at $90k, I'm below that. Also, this number (the median income) gets adjusted next month for the year 2006, and I assume that it will go up... how much, who knows, but up... which puts us even further below the median.

I really just hate the 5 year thing... putting everything on hold for 5 years. That's really the reason why we want the chapter 7... so we can get on with our lives NOW.

[bkfiler]

make a complete list over everything you pay for, daily, weekly, monthly, bi-yearly and yearly. the more complete the better.

take the info to more attorneys and run the case by them. keep going until you hear what you want a few times.

[StaciMM]

Based on that, if your expenses are close to or exceed your income, ch. 7 is NOT unreasonable. (It is easy to forget that a few states have a higher than standard cost of living.)

[bkfiler]

also remember that you dont pay everything back to your creditors in call cases. its based on what you can afford to pay back.

if you have $100 to $166 disposable income then you may be a 3 year plan. if you have over $166 then it might be a 5 year plan. trustee decides and your attorney and the creditors object if needed.

[FoolAndHisMoney]

also remember that you dont pay everything back to your creditors in call cases. its based on what you can afford to pay back.

if you have $100 to $166 disposable income then you may be a 3 year plan. if you have over $166 then it might be a 5 year plan. trustee decides and your attorney and the creditors object if needed.

Actually if you have 100 to 166 you may still be in a FIVE year plan . The 100-166 has to be 25% of your unsecured debt though. Even the US Trustee may not force a debtor into a plan where they may only recieve $7000 in a five year period for 100k in unsecured debts. It's not feasable for anyone. If you are below the median and have to file a chapter 13 for any reason then you can qualify for a 3 year plan. That's it as far as I know.

[SinkingFast]

Anyone have examples of these budgets? I spoke to the lawyer and he flat out said "forget chapter 7, you'll have to do a chapter 13 with a 5 year plan" This is about as bad as I can imagine having to do. I mean, I don't mind paying back the creditors... I really wish I could have avoided having the problems entirely! Unfortunately I'm in a position where I have about 100k in credit card debt, rent of $1650/month, a $690/month car payment, a $223 boat payment... both of which are at about break even as far as what they are worth compared to what I owe... and no other assets.... I've sold off everything else over the last year or so to keep afloat.

Been there done that. All we have left are vehicles. No retirement. Loosing the house. Sold the jewelry already.

Your consult sounds like the first attny we had a face to face with. He didn't do the Means Test. He just took Hubby's net, did some calculations, said several of our actual expenses were more than the court would allow, dinked us, and proudly announced we qualified for Ch 13. And it would only cost us $197/month in a 5 year plan. He was fairly satisfied that the Court would accept his proposal.

We are a good solid family of 5, with a live-in elderly parent. On the Means Test, if we have to go as a family of 5, we are just a hair over the current median income. If we are able to count Mom, we are well under the median income. And, of course, one person, one way or the other, affects other portions of the Means Test as well. The attny mentioned above wouldn't even allow us to consider Mom as a member of the household even tho we claim her as a dependent on our income taxes. A couple other attnys we've chatted with felt if we claim her she counts, but they are gonna have to check to be sure.

We've had a phone consult with an attny. With basic info, he felt we were borderline. In a face to face with another attny, she felt strongly we had a good case for Ch 7. Both said they'd have to see how the Means Test went. And of course, there are other passes if we fail the Means Test.

The conservative attny won't even let us file until the magic 70/90 day marks pass. The other 2 said the extra time is a waste. Basically, worst case scenario is we might wind up having to negotiate the amount we charged for son's college books for spring semester.

You need to chat with several more attnys. Get more opinions. The one you've chatted with may be like the first one we met with in person. So far, after chatting with 3, 2 have similar opinions and the conservative one is the odd man out. We still have a couple more appts coming up next week. Will be interesting to see what the others have to say. And I have some homework to do as well. I wanna see the attnys in action at hearings. See how they interact with the Trustees/Judges/Court Representatives. Good relationships there could be a huge key. Does the Court trust/respect/like the attny or not.

[bkfiler]

You need to chat with several more attnys. Get more opinions. The one you've chatted with may be like the first one we met with in person. So far, after chatting with 3, 2 have similar opinions and the conservative one is the odd man out. We still have a couple more appts coming up next week. Will be interesting to see what the others have to say. And I have some homework to do as well. I wanna see the attnys in action at hearings. See how they interact with the Trustees/Judges/Court Representatives. Good relationships there could be a huge key. Does the Court trust/respect/like the attny or not.

[LostOne0069]

Thanks everyone... and SinkingFast, Thanks for your input in particular. I was REALLY depressed after talking to that first attorney... he was talking about $500-$750/month payments on that 5 year plan too and said that he "doesn't do reaffirmations" He also said that I wouldn't be able to buy a house until after the 5 year plan was done and that the 10 years on credit report started after the 5 year plan etc. etc.

I'm going to make some more appointments with different attorneys. The median income for NJ for a family of 6 is $101,000. So at $90k, we're well below it.... not to mention I read on one of the bankruptcy info sites that the median income figures adjust for the new year at the end of january and come into effect as of Feb 14... so it's probably going to be even higher whereas my income will still be the same.

I'm REALLY hoping that we can go chapter 7... I just want this DONE WITH so that we can move on with our lives and start rebuilding. Oh and the ONLY thing we ever plan to buy on credit again will be houses and cars... and we don't plan on doing any of those without decent down payments to keep us from getting upside down. I HATE this BK thing. up until 3 months ago we hadn't been late on a payment in over 12 years... which is probably how we got so much credit... which is how we got into trouble.