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cfortunato
cfortunato, Attorney
Category: Bankruptcy Law
Satisfied Customers: 8023
Experience:  Bankruptcy professor.
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My income is $100k annually, but my cash flow is minus $399.00

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My income is $100k annually, but my cash flow is minus $399.00 each month. Even with the negative cash flow, I still fail the Chapter 7 means test. My credit card debt is $35,000 and my student loan balance is $55,000. My monthly debt payments are: credit cards $700, two car notes total $661, a mortgage $1,426, student loans $600.00. The standard deductions I listed for a household of 3 were: food, household, supplies and personal $1,171, health care $180, housing and utilities $458, vehicle expenses (2 cars) $414, vehicle ownership expense (2 cars) $331. For other necessary expenses I listed: $1632 for taxes, $18 for life insurance, $886 for childcare expenses. For additional expense deductions, I listed: $241 for health insurance, $208 for health savings account. Did I not complete the means test accurately? How can I fail it with a $399.00 negative cash flow? I know that if I fail the the test, then I would have to consider Chapter 13. But how can I pay on a Chapter 13 plan if I have a negative cash flow?
Submitted: 5 years ago.
Category: Bankruptcy Law
Expert:  cfortunato replied 5 years ago.
Hi JACustomer,
It is difficult to pass the Means Test when your income is above the state median for your household size, and it appears that you did enter the correct information.
If you file a Chapter 13, you would not have a "negative" cash flow, as the $700 being paid to the credit cards would be reduced. If your cash flow is currently negative $399, only $301 per month would be paid towards the credit card debt, instead of the $700 you are currently paying.

I think this is what you wanted to know. If not, please let me know.
Thank you!
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