I'm a bit confused about the qualifications for chapter 7 bankruptcy. It looks like the new laws regarding the means test replace them using your actual income and expenses to qualify you, however you still must report your actual income and expenses on the schedules... So, say you pass the means test, but there is a big difference between the income and expenses. Would this still disqualify you from doing chapter 7, if they think you can afford to pay them?
you are in the Eastern District of California Bankruptcy Courts. Based on the fact that you live in Folsom, your case would be filed here in Sacramento.
Unfortunately the Judges, and more importantly the U.S. Trustee here look at the "I" & "J" schedules to determine if you can afford to pay money to your creditors in a Chapter 13 case. The more you have the more likely you are to be challenged. Often I see people in my office that supposedly have money left over when the expenses are deducted from the net income. The vast majority of those turn out to be underestimating their actual expenses. If you go to my website and click on the "Debt & Budgeting Calculators" the link will take you to various calculators. I would suggest you take a look at the "Expense" calculator. It does the math for you as to each expense and how often you pay that expense. I have it built years ago to help my clients get a handle on knowing their real expenses. If you use it you may find where the "hole in the bucket" is.
Beyond that suggestion, I would recommend that you seek a quality bankruptcy attorney to at least advise you before you step on a land mine. To find a qualified bankruptcy attorney I would first check their Avvo rating. The second way to find a quality bankruptcy attorney would be to go to the CA State Bar website and look for a State Bar CERTIFIED Bankruptcy Law Specialist. A third way would be to go to the National Association of Consumer Bankruptcy Attorneys. They have a list of members in your area.
I hope this helps.
This response does not constitute legal advice nor is the attorney providing this advice in any way liable for the providing of this information. It is provided for general information only. No attorney client relationship in made by the answering of this question. Any reader of this response is recommended to seek the advice of a competent attorney in your area.
Chapter 13 Bankruptcy Attorney
If you pass the "means test", Some courts will still examine whether or not you have the ability to fund a chapter 13 bankruptcy plan. However, in my experience the amount of the disposable income indicated on the schedule J Would have to be quite large. Additionally, many courts require a showing of more then nearly a certain amount of disposable income before it they will dismiss a Chapter 7 bankruptcy case under section 707(b)(3). Your best course of action is to contact a local bankruptcy attorney with a can of value wait your case and, based upon his knowledge of the local practice of the U.S. Bankruptcy Court in your jurisdiction, recommend whether or not chapter 7 or perhaps chapter 13 might be a better choice of chapter for debt relief. Best regards.
Richard gave you a great answer. Short answer, it is possible that if you still show disposable income even if you are below median income, you could still end up in a chapter 13. However, generally, so long as you can provide a reasonable explanation for the difference, you should be okay.
For example, if a debtor presently has no housing expense because he is living with his parents or living with a friend, in a few places in the petition, I will explain that circumstance and state that debtor expects to move in the coming weeks/months and incur a rental expense of approximate $xxx.xx amount.
However, much depends on how your district and US trustee views the interplay of the means test and schedule I&J, so you will want to have an attorney in your area handle your BK.
Some courts look at it, some do not. I have practiced bankruptcy law in three states. In 2 of those states they examine disposable income from I/J and if you have as much as $200 leftover at the end of the month, then the trustees will try to push you into a chapter 13. This is why it's very important to get a lawyer. A lawyer will help you more fully examine your budget and present it in a way that is more likely not to draw criticism from the Trustee or the United States Trustee's office.
If you think lawyers are expensive, try going without one, you'll likely discover it just got a lot more expensive.
Both previous attorneys posted excellent answers. Also, if you do end up in a "below median 13", it means your presumptive plan period is most likely going to be 36 months instead of 60.
The answers to these questions may be different depending on your individual circumstance and should not be considered as legal advice or the establishment of an attorney-client relationship.