Basically, if you are over, then you are a chapter 13. If you are under, then you are a chapter 7.
Now remember that these numbers can be adjusted by child support payments (received or made), larger mortgages, huge tax debt, etc. It is a gross overgeneralization to say that if you are over that figure then you MUST be a chapter 13, but this is the baseline we start with. That being said, here are the current figures for Salt Lake County that we use on our Form 22C* (6 month average of current monthly income and disposable income):
Married with 1 child: $76,066
Married with 2 children: $83,537
Married with 3 children: $91,937
Married with 4 children: $100,337
(If you can’t see the pattern yet, each child we add bumps up your median income figure by $8,400).
As I said above, being over doesn’t necessary mean that you’ll be in a repayment plan (like a chapter 13), but this gives us a nice baseline.
* (Notice that I called it “Form 22C” . That is because I’m old. The current form is called Form 122A Current Monthly Income and Means Test for Chapter 7 or Form 122B or 122C).
Generally, you wipe out the debt.
Every week or so I look at the “insights” on my blog to see what searches people run. Here is today’s entry:
If you look at the searches, you can see that somebody was on my blog today who apparently had a financed vehicle, damaged in an accident, that was going to be or already was repossessed. I’m assuming that they’re worried about being sued by the bank. If they don’t file bankruptcy, that’s a real possibility. If they do file bankruptcy, then they should be fine.
Basically, you can discharge that debt and turn over the vehicle, no matter what the condition. Now you should have had it fully insured, and if you receive an insurance settlement, you may have to turn over those monies to the bank who financed your car.
However, if you let your insurance lapse, then there’s no insurance settlement coming. In theory, the bank could sue you for the damage to the car, but that gets wiped out by the bankruptcy as well.
I wrote about this 3.5 years back. It’s still relevant:
What happens after a repossession if my car is in bad shape with body damage?