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Chapter 7-Expenses

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Chapter 7-Expenses

My husband and I filed for Chapter 7 bankruptcy on July 12th, we passed the means test by about 8K, but on the expense sheet it says we have around $400 left each month. (As a side note we did not have to claim $800 in SSDI my husband gets a month for the means test, but we did have to include it in the budget.) Our attorney says this isn’t a big deal and we’ll still be good to go for Chapter 7, but everything I read online says we’ll be put into a Chapter 13, which is correct?
Message 1 of 12
11 REPLIES 11
Senior Contributor

Re: Chapter 7-Expenses

Go by what your lawyer said. If its already filed. There's not much more to say. You passed the means test. SSDI is exempt. $400 a month left over isnt a lot. That should do it. Welcome to the forum! Good Luck!





My posts are JMHO. I DO NOT claim to be a FICO expert. Just sharing my experiences from rebuild to recovery after BK DC. My siggy is not to brag at all. Just to show fellow members what can be accomplished when you do it right and play the FICO Credit Game.
Message 2 of 12
Valued Contributor

Re: Chapter 7-Expenses

IDK.  $400 per month is def enough to pay back creditors in a Ch 13.  

$400 x 60 = $24,000 that could go to your creditors.

 

I would review your numbers harder and make sure you have counted all present and expected future expenses.

Car maintance?

House maintance?

Child care?

Gas?

Insurance?

Better insurance?

 

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Message 3 of 12
Frequent Contributor

Re: Chapter 7-Expenses


@Albinochick816 wrote:
My husband and I filed for Chapter 7 bankruptcy on July 12th, we passed the means test. . . but (Schedule J shows) we have around $400 left each month (due to the inclusion of $800 per month in SSDI).. . . Our attorney says this isn’t a big deal and we’ll still be good to go for Chapter 7, but everything I read online says we’ll be put into a Chapter 13, which is correct?

Listen to your attny - you might want to inquiry as to why he/she does not see a problem. 

 

Your positive cash flow is directly due to the inclusion of SS benefits.  In many jurisdictions (maybe all) case law states that a Debtor cannot be forced to use the SS reported on Schedule I in order to satisfy the the argument that the debtor can afford to pay more to the creditors under a Chapter 13 Plan.

 

Des.

 

Message 4 of 12
Senior Contributor

Re: Chapter 7-Expenses


@Shooting-For-800 wrote:

IDK.  $400 per month is def enough to pay back creditors in a Ch 13.  

$400 x 60 = $24,000 that could go to your creditors.

 

I would review your numbers harder and make sure you have counted all present and expected future expenses.

Car maintance?

House maintance?

Child care?

Gas?

Insurance?

Better insurance?

 


So your saying they shouldn't have any money left over every month? Cant save any money for emergencies. One ER visit co-pay could be from 100-350 dollars God forbid. Car needs tires or a repair. But with nothing left over. Where would the money come from if they gave up what little they have left over? It's not making sense why they should give up everything towards a Chapt13 and sit in the house and cant even go out once to see a movie just to get away for a short while. Sorry I disagree.





My posts are JMHO. I DO NOT claim to be a FICO expert. Just sharing my experiences from rebuild to recovery after BK DC. My siggy is not to brag at all. Just to show fellow members what can be accomplished when you do it right and play the FICO Credit Game.
Message 5 of 12
Frequent Contributor

Re: Chapter 7-Expenses


@FireMedic1 wrote:

 

So your saying they shouldn't have any money left over every month? Cant save any money for emergencies. One ER visit co-pay could be from 100-350 dollars God forbid. Car needs tires or a repair. But with nothing left over. Where would the money come from if they gave up what little they have left over? It's not making sense why they should give up everything towards a Chapt13 and sit in the house and cant even go out once to see a movie just to get away for a short while. Sorry I disagree.

Just because one is below median income or, if above median, passes the Means Test, does not mean one cannot be found to abuse the system when filing a Chapter 7.

 

Being below median income or passing the Means Test just means there is no "presumption of abuse".

 

In a presumption of abuse case, the burden is upon the debtor to show that he/she is not abusing the system. In any other case, a debtor is still subject to a finding of abuse but the burden of proof shifts to the creditor or trustee.

 

In a case where there is no presumption of abuse, proving abuse is based upon the "totality of the circumstances" and one of the elements is the ability to pay as well as the source of those additional funds (SS in OP's case).  The issues you mention are also part of the consideration but, in the context of a Chapter 13, unanticipated (emergency) expense happen all the time and are easily addressed.   In the end, it will be up to the trier of fact (the judge) to determine if there is abuse. This is a case-by-case analysis.

 

Des.

Message 6 of 12
Senior Contributor

Re: Chapter 7-Expenses


@despritfreya wrote:

@FireMedic1 wrote:

 

So your saying they shouldn't have any money left over every month? Cant save any money for emergencies. One ER visit co-pay could be from 100-350 dollars God forbid. Car needs tires or a repair. But with nothing left over. Where would the money come from if they gave up what little they have left over? It's not making sense why they should give up everything towards a Chapt13 and sit in the house and cant even go out once to see a movie just to get away for a short while. Sorry I disagree.

Just because one is below median income or, if above median, passes the Means Test, does not mean one cannot be found to abuse the system when filing a Chapter 7.

 

Being below median income or passing the Means Test just means there is no "presumption of abuse".

 

In a presumption of abuse case, the burden is upon the debtor to show that he/she is not abusing the system. In any other case, a debtor is still subject to a finding of abuse but the burden of proof shifts to the creditor or trustee.

 

In a case where there is no presumption of abuse, proving abuse is based upon the "totality of the circumstances" and one of the elements is the ability to pay as well as the source of those additional funds (SS in OP's case).  The issues you mention are also part of the consideration but, in the context of a Chapter 13, unanticipated (emergency) expense happen all the time and are easily addressed.   In the end, it will be up to the trier of fact (the judge) to determine if there is abuse. This is a case-by-case analysis.

 

Des.


I went through with a Chapt 7 no assest BK almost 4 yrs ago and know everything you just stated very well. I passed the means test and had $300 leftover after expenses. There was no abuse. And was DC'ed. So a recap about the BK laws is not warranted towards me. So your preaching to the chior. You and I explained in that other thread almost exactly the same thing as you said in a differently way. So when a poster says the court will take every red cent and leave them on the edge of nothing. I respectfully diagreed. And we'll leave it at that.





My posts are JMHO. I DO NOT claim to be a FICO expert. Just sharing my experiences from rebuild to recovery after BK DC. My siggy is not to brag at all. Just to show fellow members what can be accomplished when you do it right and play the FICO Credit Game.
Message 7 of 12
Regular Contributor

Re: Chapter 7-Expenses

Trust your attorney. They do this every day. They go in front of the same trustee and judge every month and discuss the same issues, case after case.
Message 8 of 12
Senior Contributor

Re: Chapter 7-Expenses


@FireMedic1 wrote:

@Shooting-For-800 wrote:

IDK.  $400 per month is def enough to pay back creditors in a Ch 13.  

$400 x 60 = $24,000 that could go to your creditors.

 

I would review your numbers harder and make sure you have counted all present and expected future expenses.

Car maintance?

House maintance?

Child care?

Gas?

Insurance?

Better insurance?

 


So your saying they shouldn't have any money left over every month? Cant save any money for emergencies. One ER visit co-pay could be from 100-350 dollars God forbid. Car needs tires or a repair. But with nothing left over. Where would the money come from if they gave up what little they have left over? It's not making sense why they should give up everything towards a Chapt13 and sit in the house and cant even go out once to see a movie just to get away for a short while. Sorry I disagree.

 

Part of your budget each month should include a line for medical expenses and auto maintance.   These line items are an estimate so for example auto maintance should include an estimate on repairs you might reasonablely expect to have.  If you have a new car under warrenty you would only have things like oil changes, tires, and brakes, but if you have an older car and routinely have 3 repairs a year that avgerage $400 each you sould be budgeting $100 per month for auto maintaince to cover those repairs in addition to normal maintaince items.  Do the same thing with medical expences, and home repairs and I bet you don't much left over from that $400.    You can't account for a castrophe, but you can make some really educated guesses based upon past experiences. 


 


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Message 9 of 12
Valued Contributor

Re: Chapter 7-Expenses


@MakingProgress wrote:

@FireMedic1 wrote:

@Shooting-For-800 wrote:

IDK.  $400 per month is def enough to pay back creditors in a Ch 13.  

$400 x 60 = $24,000 that could go to your creditors.

 

I would review your numbers harder and make sure you have counted all present and expected future expenses.

Car maintance?

House maintance?

Child care?

Gas?

Insurance?

Better insurance?

 


So your saying they shouldn't have any money left over every month? Cant save any money for emergencies. One ER visit co-pay could be from 100-350 dollars God forbid. Car needs tires or a repair. But with nothing left over. Where would the money come from if they gave up what little they have left over? It's not making sense why they should give up everything towards a Chapt13 and sit in the house and cant even go out once to see a movie just to get away for a short while. Sorry I disagree.

 

Part of your budget each month should include a line for medical expenses and auto maintance.   These line items are an estimate so for example auto maintance should include an estimate on repairs you might reasonablely expect to have.  If you have a new car under warrenty you would only have things like oil changes, tires, and brakes, but if you have an older car and routinely have 3 repairs a year that avgerage $400 each you sould be budgeting $100 per month for auto maintaince to cover those repairs in addition to normal maintaince items.  Do the same thing with medical expences, and home repairs and I bet you don't much left over from that $400.    You can't account for a castrophe, but you can make some really educated guesses based upon past experiences. 



^ This.

 

BK is not supposed to be easy.  

Ch 13 is not supposed to get you a comfortable lifestyle with no issues or struggles and money for entertainment and vacations.

The idea of BK is to give the debtor a chance to get back on their feet.

If you have $400 left over each month, you either need a better attorney or you need to be in a Chapter 13.

Rebuild started in 2014  -  $100k+ unsecured credit in 2017  -  $250k+ unsecured credit in 2019.

DON'T WORK FOR CREDIT CARDS ... MAKE CREDIT CARDS WORK FOR YOU!

10% Rotating - Discover                    5%-20% - Amazon & Lowes                3-6% Groceries - NFCU & Amex Preferred
3-5% Gas - NFCU & Ducks Unl         4% Dining & Entertain - Savor            3% Travel & Hotels - Flagship, Propel, & Uber
2% Everything Else - Flagship          1% Cancer Charity - Fifth Third          0% Finance Promos - Venture & QuickSilver





    
Message 10 of 12
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