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cfortunato
cfortunato, Attorney
Category: Bankruptcy Law
Satisfied Customers: 8023
Experience:  Bankruptcy professor.
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My total debt, comprising consumer and tax, is above the means

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My total debt, comprising consumer and tax, is above the means test threshold.

The non-governmental creditors seem to have largely given up on pursuing me. If I file BK, is there a chance that, by failing to prove up their claims, they will succeed in bringing me back into Chapter 13?

cfortunato :

 


Hi - my name is XXXXX XXXXX I'm a Bankruptcy and Consumer Protection attorney here to assist you.

cfortunato :

The amount of one's debt does not put one above or below the Means Test threshold. It is the amount of one's income that does this.

cfortunato :

Did you mean that the amount of your income is above the Means Test Threshold?

Customer:

I don't know what the income Means Test Threshold is. I was basing what I said on a form I saw with fields for income and outgoings: I thought--maybe mistakenly--that it said something like: "Don't fill out this form if your total unsecured debt is above $X or your secured debt is above $Y."

cfortunato :

That form is for a Chapter 13 only.

cfortunato :

If your debts are over a certain amount, you cannot file a Chapter 13.

cfortunato :

For a Chapter 7, it does not matter how much debt you have.

cfortunato :

But you cannot file a Chapter 7 if your income is over a certain level.

Customer:

What is that level?

cfortunato :

This level is based on the number of persons in your household.

cfortunato :

how many are in your household?

Customer:

Two--my wife and I but we file individual tax returns.

cfortunato :

Is your gross household income (your income and your wife's income) less than $4297 per month?

Customer:

No

cfortunato :

That is the Means Test threshold amount. If your gross household income over that amount, you cannot file a Chapter 7 - you have to file a Chapter 13 - unless you have high medical expenses, or unless some of your income or your wife's income gets contributed to dependents outside your home (eg. child support payments).

cfortunato :

Child support payments get subtracted from your income for the Means Test.

Customer:

I understand.

cfortunato :

To file a Chapter 13, you cannot have more than $360,475 unsecured debt, and you cannot have more than

cfortunato :

$1,149,525 secured debt.

cfortunato :

If you have more than that amount of debt, you would have to file a Chapter 11.

Customer:

Ah--I do have more than $360,475 unsecured debt.

cfortunato :

Then if your income is too high for a Chapter 7, you would have to file a Chapter 11.

Customer:

I have to go to work now but will see your response a bit later. Thank you very much!

cfortunato :

You're welcome!

Customer:

I need to find out about Chapter 11...

cfortunato :

A Chapter 11 is very similar to a Chapter 13 - with both, you have to pay all disposable income (gross income minus living expenses) to the Bankruptcy court for up to 60 months.

Customer:

One more question. It seems the best choice for me is simply to make informal payments to IRS and/or allow them to apply levies until the total amount is satisfied. In that case can they shut down my practice? It is in compliance in regard to employee withholding, etc. and is a sole proprietorship.

IRS cannot close your business (or practice) because you owe money to them. (And it would not make sense for them to do so, as you would not be able to pay them if your practice were closed.)
Customer: replied 3 years ago.

That is very reassuring, also in the sense that they are primarily interested in getting their money so I hope will accept informal payments.

Yes - you can always make partial payments to the IRS.
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