questions re Ch.13 and Chapter 7

[pdsnickles]

Hi,
I am unclear about the new bankruptcy laws. (I know, I am not alone!)

Let's say you want to file Chapter 7 but fail the Means test. So they
make you file Chapter 13.

So let's say then that you have trouble making ends meet and cannot
make the payments; what then? Or what if you simply refuse to make the
payments on your chapter 13 plan?

Do they put you in jail for not making the payments? do they attach
your wages? What happens if you simply cannot make the payments on the
Chapter 13 plan they are forcing on you?

Also, what about 401k contributions and the Chapter 7 Means test? Can
you increase your 401k contributions, say 6 months before applying, in
order to have less disposable income? What about buying a new car to
help pass the means test? Are their legal tricks to passing the means
test for Chapter 7?

Seems to me that if you are having trouble paying your bills you should
not be prevented from filing Chapter 7, you should have that
opportunity for a new start, as opposed to being forced to live a life
of poverty with Chapter 13... But that's just my humble opinion. Isn't
that the idea that "bankruptcy" was intended for, to have a fresh start
without being put into servitude?

 

[RudeDave]

Hi,
I am unclear about the new bankruptcy laws. (I know, I am not alone!)

Let's say you want to file Chapter 7 but fail the Means test. So they
make you file Chapter 13.

So let's say then that you have trouble making ends meet and cannot
make the payments; what then? Or what if you simply refuse to make the
payments on your chapter 13 plan?

Your case gets dismissed, unless the reason you can't make payments is not
subject to your control. If you were to lose your job, or something like
that, you may be able to convert the case to a chapter 7.

Do they put you in jail for not making the payments? do they attach
your wages? What happens if you simply cannot make the payments on the
Chapter 13 plan they are forcing on you?

There is no debtors prison in the U.S., yet.

Also, what about 401k contributions and the Chapter 7 Means test?

They are not considered part of the bankruptcy estate.

Can
you increase your 401k contributions, say 6 months before applying, in
order to have less disposable income?

Yes, but that won't help get passed the presumption of abuse if you earn
more than the median gross income.

What about buying a new car to
help pass the means test? Are their legal tricks to passing the means
test for Chapter 7?

The trick to qualify for chapter 7 is to be poor enough. IOW: Don't earn
more than the median gross income.

Seems to me that if you are having trouble paying your bills you should
not be prevented from filing Chapter 7, you should have that
opportunity for a new start, as opposed to being forced to live a life
of poverty with Chapter 13... But that's just my humble opinion. Isn't
that the idea that "bankruptcy" was intended for, to have a fresh start
without being put into servitude?

If you can't afford to buy Congress you'll have to live with the one MBNA
bought for you.

 

[pdsnickles]

Thanks for the reply.

Your case gets dismissed, unless the reason you can't make payments is not
subject to your control. If you were to lose your job, or something like
that, you may be able to convert the case to a chapter 7.


There is no debtors prison in the U.S., yet.


They are not considered part of the bankruptcy estate.


Yes, but that won't help get passed the presumption of abuse if you earn
more than the median gross income.


The trick to qualify for chapter 7 is to be poor enough. IOW: Don't earn
more than the median gross income.


If you can't afford to buy Congress you'll have to live with the one MBNA
bought for you.