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Atlanta Georgia Bankruptcy Lawyer Bernd Stittleburg

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     The term means in this context is not implying an average but rather does the debtor have the ability to pay back some of his debts. More simply, after taking into consideration all of the debtor’s normal monthly bills (mortgage or rent, utilities, food, etc.) are there any funds remaining at the end of the month. If you have enough money left over, you will not be able to file a Chapter 7 bankruptcy case.

     The new law establishes that if a debtor has enough money left over at the end of the month to pay his unsecured creditors at least $6,000 or $10,000 or 25% of the total of his unsecured debt, then he will have to file a Chapter 13 bankruptcy case if he wants relief from his debts. If you divide the $6,000 figure by 60 months you end up with $100.00.  If you divide the $10,000 figure by 60 months you get $166.67.   So, after subtracting all of your normal monthly bills from your income (this includes all the tax withholdings and insurance costs), if you end up with $100.00 or more or $166.67 or less, then you would look to see if either of these two figures or any figure in between will pay 25% or your unsecured debt.  If you find that it can, then you will have to file a Chapter 13 case if you want relief from your creditors.

     The question then becomes, how will these monthly expenses be calculated?

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   Expenses under the new law will be compared to the allowable expenses as published by the Internal Revenue Service. The standards are designated as the  National Standards for Allowable Expenses. If you want to review these IRS standards click here.

     It is anticipated that if the debtor’s monthly expenses fall below or within the above referenced guide lines, the expenses will most likely not be challenged.  However, if a debtor has expenses that exceed these standards, then he will probably have to produce evidence as well as justification for them.

Notice: Any information provided on this site is provided for informational purposes only and should not be relied on to ascertain whether a debtor should or should not file a bankruptcy case.  If a debtor wants to determine whether a case must be filed under chapter 7 or chapter 13, please contact Stittleburg Law Offices, LLC for an appointment.

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