Disposable Income

[sophie]

I haven't filed yet, just filling out the paperwork and my question is after you write down your take home pay minus all your monthly charges that equals your disposable income right? Well we are so much in the hole every month that although we are well over the medium income wouldn't the fact that we have negative left over every month automatically qualify us for a 7? (But then again, wouldn't everyone filing be in the hole every month? How would anyone have money left over)? Or do they go over every line and say, you spend too much on electric, too much on mortgage, too much on food, etc. and force you to file a 13?

[lrprn]

Unfortunately it isn't as simple as this, sophie. Are you planning on filing Ch 7? Have you gone through the means test yet? If you have, did you have to continue on into the second section?

Although our own shortfall was $2600 every month, because of how much income my husband and I make (we are well over the state median income), all three bk lawyers we conferred with said the district trustee would do his best to push us into a 13 no matter how our means test and schedules turned out. Once our non-secureds were out of the picture, we had more than enough disposable income showing for a Ch 13, so it didn't matter anyway.

[FoolAndHisMoney]

Unfortunately it isn't as simple as this, sophie. Are you planning on filing Ch 7? Have you gone through the means test yet? If you have, did you have to continue on into the second section?

Although our own shortfall was $2600 every month, because of how much income my husband and I make (we are well over the state median income), all three bk lawyers we conferred with said the district trustee would do his best to push us into a 13 no matter how our means test and schedules turned out. Once our non-secureds were out of the picture, we had more than enough disposable income showing for a Ch 13, so it didn't matter anyway.

I still think if you play by the rules and pass the means test regardless of what any trustee wants you should file for a chapter 7. They got the law changed, you play by the rules and still face trouble, it's BS!

Sophie, you and anyone else should file a chapter 7 regardless of what your attorney says as long as you pass the test. If the trustee really tries to force debtors into a chapter 13 even when passing the test then let the judge hear it. The worst that can happen is the judge will agree with them and give you a chance to convert to a 13 and at least you tried.
The more I hear iprn's type of stories the more I wonder about the attorneys really working for their clients.

[FoolAndHisMoney]

Irprn, since you pass the means test with a 2600 shortfall how is your disposable income calculated on the chapter 13 b22 form which is how they determine what must be paid into the plan?

[SinkingFast]

I still think if you play by the rules and pass the means test regardless of what any trustee wants you should file for a chapter 7. They got the law changed, you play by the rules and still face trouble, it's BS!

Sophie, you and anyone else should file a chapter 7 regardless of what your attorney says as long as you pass the test. If the trustee really tries to force debtors into a chapter 13 even when passing the test then let the judge hear it. The worst that can happen is the judge will agree with them and give you a chance to convert to a 13 and at least you tried.
The more I hear iprn's type of stories the more I wonder about the attorneys really working for their clients.

The deal is, FAHM, the attnys won't take you in as a Ch 7 if they are fairly certain the Court will force you to convert. The attny risks having to pay the difference out of pocket themselves. A penalty of the New Law to prevent attnys from frivolously filing Ch 7 when they should have brought the client in as a Ch 13 in the first place.

It's gonna be tough many places to find an attny with the guts to take your case as a Ch 7 when you're over the Median under the New Law.

I haven't filed yet, just filling out the paperwork and my question is after you write down your take home pay minus all your monthly charges that equals your disposable income right? Well we are so much in the hole every month that although we are well over the medium income wouldn't the fact that we have negative left over every month automatically qualify us for a 7? (But then again, wouldn't everyone filing be in the hole every month? How would anyone have money left over)? Or do they go over every line and say, you spend too much on electric, too much on mortgage, too much on food, etc. and force you to file a 13?

It is quite possible that attnys and the Trustees will cut expenses. They might cut the amount that you spend on cell phone. Or will say the Court doesn't allow Cable. They might even say you spend too much on food.

So there are some expenses that attnys you Consult with, and possibly even the Court, may reduce or won't allow.

[lrprn]

Irprn, since you pass the means test with a 2600 shortfall how is your disposable income calculated on the chapter 13 b22 form which is how they determine what must be paid into the plan?

FOMO, our means test Part 5 line 58 shows we have a disposable income of around $450.00 each month.

We filed under the new law which forced us to use the IRS allowed expenses for housing, utilities, and transportation rather than our actual expenses for each of those. Since we live in the most expensive cost-of-living county in our state, our verified monthly expenses and secured bills consistently average a fair amount higher than the amounts allowed by the IRS for our state for housing and transportation. We could make up for some of the difference in our expenses in the Other Necessary Expenses lines, but having to use the IRS figures which were significantly below what we actually have to spend just killed us on our means test.

This is exactly what the new law was meant to do - when the dust settled, we ended up on the Ch 13 side when I believe we would have been able to file Ch 7 if we had filed before last October. Oh well - no use crying over spilled milk. We're mopping up the mess and moving on as best we can under the present law.

[FoolAndHisMoney]

The deal is, FAHM, the attnys won't take you in as a Ch 7 if they are fairly certain the Court will force you to convert. The attny risks having to pay the difference out of pocket themselves. A penalty of the New Law to prevent attnys from frivolously filing Ch 7 when they should have brought the client in as a Ch 13 in the first place.

It's gonna be tough many places to find an attny with the guts to take your case as a Ch 7 when you're over the Median under the New Law.

I know about the penalty for an attorney filing a frivolous chapter 7. I always thought that this applies if the attorney doesn't properly calculate the 6 months income and "forgets" to list a clients bonus check in the calculation or something like that. If someone should pass the means test and their true expenses are just not enough to fund a 13 but they still have to file a 13 anyway, I can't imagine this being considered frivolous. The office of the UST has always used these IRS tables and forced a debtor paying $1200 a month rent when they are only allowed $900 a month. Now it seems like if a debtor is allowed $900 a month for their region and the UST can still force them into a 13 because that's unreasonable then God help us

[InLimbo]

We are way over the income for filing chapter 7, but with the unsecured debts out of the way, we are still minus each month by several hundred. Our lawyer has decided to try for a chapter 7. He did say the worst thing to happen was to hear "no" and then convert to a chapter 13. Ours is not gonna be a easy case and it's oh so scary. I do feel though that he wouldn't be doing this (with the new law and all) unless he thought we had a good chance. There are several expenses that the trustee will most likely challenge us on, like the $200.00 month we pay for our oldest daughter for community college (she 19 & lives at home and is totally dependent on us) and my husbands expenses that he has to have each week for his job. He drives Line haul with a big freight company here and he cannot of course take his lunch with him to work. Our attorney said to have his log books with us to back that up. Log books are no problem but he has never kept receipts for his meals so all of these things really worry me....once they start cutting our expenses we will most likely be in a 13 before we know it.
I just don't know how the heck we are gonna go thru two 341 meetings if it comes to that We had already paid our attorney his deposit for a chapter 13 but since he has changed his mind, we are now having to catch up on our mortgages (only have 1 payment left to catch up on) and somehow hand over 700.00 more to the attorney before we can pursue chapter 7. We should have all this done by the middle of september, just hope the creditors hold out that long for us (last pmt to any unsecured creditor was May).
Thanks for letting me ramble on, it really does help

[lrprn]

We should have all this done by the middle of september, just hope the creditors hold out that long for us (last pmt to any unsecured creditor was May).

We stopped paying our non-secured creditors and filed four and a half months later. A few of our creditors had just moved us to collections in that time, and not one was even close to taking us to court for a judgment. If you were making payments up through April and May, then I'd say your chances of getting to mid-Sept are good. Just be sure your lawyer is ready to file as quickly as possible in case you have a creditor that starts speeding up the process. Good luck!

[InLimbo]

Irprn thanks so much for the luck! I noticed that your trustee had objections in your chapter 13, would that be something you could share and is it normal for the morgage company to object?

[lrprn]

Irprn thanks so much for the luck! I noticed that your trustee had objections in your chapter 13, would that be something you could share and is it normal for the morgage company to object?

Luckily it is not normal to have objections to your plan, so try not to worry too much about having objections to yours.

Our story - we had three objections filed to our Ch 13 plan. One was from our mortgage company saying we were a month in arrears when we filed (we weren't). The other two objections were from our trustee. One was about our retirement contributions (when you add our monthly contributions plus monthly payments to pay back my husband's six loans he took out of his retirement trying to keep us afloat, the trustee says we are over the 5% of gross income allowed in our district). The other was related to health benefits (he thinks we are double-dipping on our forms - too complicated to explain here). We had our confirmation hearing - no surprise, with three outstanding objections at that time we didn't get confirmed.

The good news - about a week ago we were notified that after a 'discussion' with our lawyer where he showed our mortgage company copies of their own mortgage invoices showing no arrears and no late fees owed when we filed, our mortgage company dropped their objection - woohoo!

However, despite efforts by our lawyer to work with our trustee, the trustee is not willing to compromise at this point because he wants our judge to express his opinion on these two "gray areas" of the new bk law. We are headed to court on Oct 5 to try to work out a compromise on both remaining objections. Until then we are hanging out in limbo making our monthly payments on time and praying daily for a final outcome we can survive for five years.

Hope this helps. Remember that it's very unlikely you will find yourself with objections, but even if you do, you and your lawyer will work together to deal with the objector and to find a solution. No one wants objections, but they aren't the end of the world either.

[InLimbo]

Thanks so much for taking the time to tell your story. I will do my best not too worry so much, but I think worrying just comes so natural for me lol.
I hope your case turns out positive for you and I'll keep you in my prayers.

[GoingUnderInNV]

I must say, having spent the last month going over my records with a fine-toothed comb, the whole issue of "disposable income" versus what one thinks their expenses are is rather eye-opening. Staring at my "expenses" I can see more than a few that I'm guessing the attorney will throw out as frivilous, which kinda concerns me. What most people think about some expenses, I need on a regular basis just to do work at home from the regular job. Cell phone, printing supplies, gas for car (work related travel), etc (no, my company refuses to supply these and other things, but I need them to do the job). Will this fly? Am I suddenly going to find myself between a rock and a hard place?

I'd be curious to know what others have seen their attorney's or Trustees throw out as frivilous when they're actually NEEDED to conduct one's life. Thanks!

[InLimbo]

yeah we're afraid that at least two of our expenses will be thrown out also. My husband drives for a large trucking company, longhaul, and he has to have expenses every week for his meals. Taking his lunch to work is just not an option when you drive longhaul and our attorney told us to just explain that to the trustee if they happen to question it and see what happens at that point. Another expense we have is my oldest daughter is in community college. She only has a part-time job working less than 15 hrs. a week. She is totally dependent on us (lives at home) and cannot pay for her tutition and books. Our attorney thinks this could raise questions and be thrown out because she is 19. My problem with this is...she just graduated from school last year...are they crazy...they they think a 18 or 19 year old right outta school can support theirselves? Much less send theirselves to college? We are only paying $200.00 month on this but hes afraid they will try to use that money for disposable income. If this happen.....then our system is totally screwed up!