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socrateaser, Attorney
Category: Bankruptcy Law
Satisfied Customers: 37864
Experience:  Attorney and Real Estate Broker -- Retired (mostly)
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If you pass the means test, which means you have very little

Resolved Question:

If you pass the means test, which means you have very little or no disposable income, it says you are allowed to file either chapter 7 or 13. Chapter 13 is a 3 or 5 year repayment plan. I want to file chapter 13 to eliminate my underwater second mortgage here in Las Vegas, but how can I choose chapter 13, if I have no disposable income ? Thank you.
Submitted: 5 years ago.
Category: Bankruptcy Law
Expert:  socrateaser replied 5 years ago.
Only individuals with "regular income" may be debtors under Chapter 13. 11 USCA § 109(e).

An "individual with regular income" is an individual "whose income is sufficiently stable and regular to enable such individual to make payments under a plan under Chapter 13 . . ." 11 USCA § 101(30).

You don't have to have any "disposable" income, beyond that necessary to pay for your allowed expenses. You could file a 0% plan and pay nothing to your creditors during the plan. This is a rare outcome, because most such debtors will file Chapter 7. But, it's legally possible.

Hope this helps.

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Customer: replied 5 years ago.
I just asked another question with more details because your answer didnt help. Anyway we did first part of the means test and failed because our regular salary is more than the state average. Then we did the second income and expense part and were told we pass the means test and we would have (minus) -82 of disposable income and we are eligible to file either chapter 7 or 13, the choice was up to us. So our question is being we passed means test and we want to file chapter 13 to convert our second mortage to unsecured debt for elimination, and being we were told we qualify for either chapter 7 or 13, then how exactly does chap 13 work if we dont have any money vailable after our expenses to pay towards a repayment plan? Thank you.
Customer: replied 5 years ago.
Relist: Incomplete answer.

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