PostHeaderIcon Chapter 7 Bankruptcy Means Test Questions.?


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DISCLAIMER:
While I appreciate your “advice”, please only answer this question if you have DIRECT expertise with these questions. I’m looking for answers that are pretty solid. If you would start your answer off with “I think…” then please do not submit an answer to this question. I also am not looking for advertisements for debt consolidation or counseling. I’ve already done that and it was NOT an option. I’m filing for bankruptcy protection, but don’t want to file for Chapter 13.

I know that Student Loans cannot be discharged through bankruptcy. That is not my question.

QUESTION #1:
When filling out Schedule J for Chapter 7 bankruptcy, can you put the MONTHLY PAYMENTS on your student loans as an “other” expense? Can the monthly payments be used anywhere to reduce my Net Income so that my ending disposable income will be reduce by the amount of my monthly payments on my student loan?

I ask because since the student loans cannot be discharged, it would seem as though the monthly payments would then be part of my household budget and therefore be allowable to reduce my monthly Net Income and disposable income.

QUESTION #2:
I already pass the median income test. However, I may not pass the acceptable disposable income test. According to the test, if I have more than about $11K of disposable income over 60 months ($183/month), then I do not pass for Chapter 7 and must file Chapter 13. However, I’ve read something about a 25% rule that I don’t quite understand. I have about $130K in unsecured debt ($55K in CC debt and $75K in student loans). My understanding of this 25% rule is that if my disposable income over 60 months is less than 25% of my total unsecured debt, then I pass the means test. If that is true, then as long as I don’t have more than $540/month in disposable income, then I pass. ($130,000 * .25 = $32,500) ($32,500/60 = $541.67). Is this a correct assumption? If not, then how exactly does this 25% rule work? Am I even allowed to use my student loans to figure my total unsecured debt for the 25% rule?

EXTRA INFORMATION:
I have no assets. I currently lease a car for $300/month and rent a room in someone’s house. Before figuring for Student Loan payments as expenses, I have about $534/month in disposable income. With the student loan payments in as an expense, I’ll be down to $224/month in disposable income and the trustee will probably let me pass the disposable income portion of the means test.

$534/month in disposable income = $32,040 over 60 months
$224/month in disposable income = $13,440 over 60 months

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