[hannah]

Great study and law review article.

[jlynn]

IMHO this article only scratched the surface. I don't know how many times I read at AOC's BK forums that in order to go Chapter 7, a person could only have between $50 and $100 left over after their monthly expenses - otherwise they would have to go 13 (this was all pre BK reform days).

That is not a fresh start. One serious problem - a major car repair, an unpaid leave for an illness, of even only a few days, etc., could tip the scale in any one month, and be near impossible to recover from.

Further, BK'ers claim problems with higher insurance rates, because as we have all become accustomed to hearing, deadbeats get in more car wrecks.

Trying to reduce monthly living expenses can be difficult. A renter is faced with a FICO score that will preclude them from renting in certain areas. It has been recommended before that people that are in this situation try and locate a landlord rather than a corporate rental company, but that is not always feasible.

The cost of moving can be extraordinary. My daughter's last move, because of no credit had to come up with $350 deposit just for her electricity! To move your landline phone around here is at least $125, and that's only if they have to push a button to turn on already existent phone jacks.

Cost of living has gone up, but minimum wage has not kept up. I think in TX it just recently was bumped from $5.75 to $6.25. So telling someone to go flip burgers to help make ends meet is not much more viable, when gas is $3.00 a gallon. Lets face it Public Transportation is not available everywhere.

Lots of causes for failure that are not discussed here. It was interesting to see that only a small percentage claimed problems keeping up with new credit.

[Pale Rider]

Originally Posted by jlynn

IMHO this article only scratched the surface. I don't know how many times I read at AOC's BK forums that in order to go Chapter 7, a person could only have between $50 and $100 left over after their monthly expenses - otherwise they would have to go 13 (this was all pre BK reform days).

There was a lot of confusion and myths in some of those posts.

If you are below the state median income, file CH 7 as usual. Texas median income is about $40 K.

If you are above the median income, that is where the $100 - $166 kicks in. If you have that much left over or more, you proceed to CH 13.

It would be possible that someone is above the median income, and still have more bills than income putting them in CH 7.

Here is an English version of the rules The New Bankruptcy Means Test Explained in Plain English

[jlynn]

Originally Posted by Pale Rider

Here is an English version of the rules The New Bankruptcy Means Test Explained in Plain English

I was referring purely to pre BK reform. Are you saying the $50-100 was a myth before the means test was implemented?

[Pale Rider]

I have no idea. I'm confused now......

I never heard of the limits before the BK law changes. When I filed many, many years ago, I had more expenses than income and the lawyer never mentioned it. CH 13 was never mentioned as an option.

[jlynn]

Originally Posted by Pale Rider

I have no idea. I'm confused now......

I never heard of the limits before the BK law changes. When I filed many, many years ago, I had more expenses than income and the lawyer never mentioned it. CH 13 was never mentioned as an option.

Wow, I've confused the Pale One. Pre BK Reform, as I always understood it, your expenses could be more than your income in a C7, even after you got all relief sought. However, if your income was more than your expenses, it could not be in excess of $50-$100 (varied a bit by district), or you could get bumped into a Chapter 13.

$50-$100 a month wiggle room does not call for building much in savings, nor is it much protection in emergency situations. That's why it really isn't an immediate or instant fresh start, IMHO, unless, and somehow, you are capable of continuing to either reduce expenses, or earn more income.