Family of 4, one income family with debt that we want to clear up
Filed chapter 13 Nov. 17th. We are a 4 person household with one person working. We have no problem paying our debt back but the monthly amount is so high that we are trying to figure out how to pay our monthly bills and eat. Due to this “means test” and everyting being template the test is unfair because our bills are so much higher than the test will alot for. Is there anything at all that we can do? We are paying $2500.00 per month rent and $3200.00 per month for chapter 13 and our lawyer is no real help whatsoever…….
Thanks for the question. I’m feeling like being blunt and honest today so here it goes.
The bankruptcy means testing sucks. It has always been crap and it will never be fair to anyone. After all, who is average?
The means test is not something your bankruptcy attorney wants to do. It was forced on the bankruptcy attorneys by creditors under the Bankruptcy Reform Act of 2005.
From what you’ve shared with me I would bet the issue here is that your life exceeds the means testing guidelines. You probably spend more collectively each month than the allowable tables permit. The tables for living expenses and housing are based on data and figures from the IRS guidelines.
If you want to see the current data used for the means test, you can find it online here. This is the data all bankruptcy attorneys must use and it breaks down expenses by where you live.
The allowances are almost laughable. For example, the allowed amount for out of pocket health care is $60 a month. That’s supposed to cover medical services, prescription drugs, and medical supplies (e.g. eyeglasses, contact lenses, etc.).
So where does this leave you? The most logical first step is to make the necessary life adjustments to reduce your housing, utility, transportation food, clothing, health care and other obligations to fit within the guidelines.
Generally, the reaction of most people is they can’t do that for one reason or another. I understand that. But it is what it is. And what it is, is a box the creditors built for you and lawmakers agreed to. The voting on that bill went like this:
18 – Yes
25 – No
55 – Yes
0 – No
“The bill was backed by the White House, the credit card industry, retailers, and financiers. The bill was opposed by consumer rights groups who said it was too harsh and did not take into account dire situations faced by those who face divorce, disease, job loss, and other crises.
“Banking, credit card, and retail” industries, supporters of the bill, gave more than $56 million to candidates and parties during the 2004 elections, most of it going to Republicans.”
If you can’t tell, I don’t have any love for BAPCPA 2005 and its means testing. To this day still blame the Bush White House and republican legislators for passing one of the most cruel bankruptcy amendments I’ve ever seen. All it did was punish consumers. And you are now living through that.
What I would suggest doing is to make an appointment with the lawyer, go in, sit down face-to-face and discuss what the allowances were for your case. Then discuss what options you might have in applying for a plan adjustment or what will happen if you are unable to make your plan payments and the plan fails.
Please update me on your progress by posting updates here in the comments section of your question. I’m very interested in how this works out for you.
You are not alone. I'm here to help. There is no need to suffer in silence. We can get through this. Tomorrow can be better than today. Don't give up.
P.S. Be sure to read ‘The Secret of Surviving Through Difficult Economic Times. What I Learned On My Journey‘.