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Terry L.
Terry L., Attorney
Category: Bankruptcy Law
Satisfied Customers: 2505
Experience:  Better Business Bur 15yrs bankruptcy experience. Chicago Bar
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Where does my net monthly income have to be in order to stay

Customer Question

Where does my net monthly income have to be in order to stay in a chapter 7?
Submitted: 1 year ago.
Category: Bankruptcy Law
Expert:  Terry L. replied 1 year ago.

Terry L. :

Hi, thanks for your question. You should hire a lawyer for specific legal advice. No attorney client relationship is created here.

Terry L. :

The court really focuses on 2 things with your budget.

Terry L. :

First: Monthly income minus normal monthly expenses should be close to zero

Terry L. :

Second, the court looks to the Means Test.
This is an analysis of the 6 months GROSS income before the case.

Terry L. :

They match that up to the median income level for the household size

Terry L. :

What state do you live in and how many people are in your household?

Customer :

I know that I meet the means testing. What I am wondering about is if there is a certain amount above which my chapter 7 would go to a 13. In other words, if I have $150 net, should I be concerned?

Terry L. :

Well, that depends on the amount of debt you have, and what percentage of the debt could be paid back with your disposable monthly income.

Customer :

Is there like a test for that?

Terry L. :

There is no set amount that would draw objection,

Terry L. :

but the rule of thumb is if there is enough to pay back 10% of the debt over 5 years, then you should be in a ch13

Terry L. :

Be sure to list all expenses that don't always occur each month too, pro -rate them

Terry L. :

like car insurance, school expenses for kids, car maintnenace, home repairs etc.

Terry L. :

Don't go crazy with these, but the court allows some since they are necessary

Terry L. :

the closer to zero the better

Terry L. :

be sure to include expenses for items you may reaffirm - furniture, jewelry, electronics etc. for your secured debts

Terry L. :

also student loan payments too can be listed

Terry L. :

There is no 'test' but I like to get my clients under $25 left at the end of the month to be safe

Terry L. :

$150 x60 would pay back $9k of debt in a ch13, so, that could be too much disposable.

Terry L. :

Of course, it's a case by case basis/totality of the circumstances.

Terry L. :

Do you have any other questions?

Customer :

No. Thanks!

Terry L. :

Feel free to request me if you do! thanks and good luck to you

Terry L. :

Terry

Terry L. :

please click accept so Just answer can close the question and I get credit for answering. thanks!
Terry

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