Bankruptcy

How to file bankruptcy ? #15 in a series ? the ?multiplier?

By David Leibowitz, Illinois and Wisconsin Bankruptcy

We’ve been spending the last week or so showing you just how simple it is to complete the means test form. Now, we have just one little box that could lead you to pull your hair out.

You need to consider you “projected chapter 13 payment” as well as the “multiplier” which applies to your “projected chapter 13 payment”.

You might as well have been born on Mars than have an understanding of this as a lay person. That’s one reason why I cringe at the thought that one of the mandatory disclosures I must give to you is that you can file a bankruptcy by yourself.

Yes, you can file a bankruptcy by yourself. You can also replace the brakes on your car by yourself if you are so inclined. But would you? I, myself, value my life and safety enough that I wouldn’t.

But if you were adventurous enough to have figured out your projected disposable income – a feat in itself since the Supreme Court still hasn’t decided what that term means, then you might be able to project what a payment might be under chapter 13.

Then, you can apply the multiplier. This is a very odd duck.  Every chapter 13 trustee is allowed to take a percentage of every payment to operate his or her office including paying his or her own salary. It’s a nice gig. Pays more than $150,000/year. Very nice money for handling bankrupt people’s assets.

The percentage varies greatly depending on a number of factors:

• How efficient is the trustee?
• Does the trustee pay secured claims directly
• How much staff does the trustee pay in his or her operation?

And for someone in Chicago or Milwaukee like me, there are more than one trustee. Each might have a different percentage factor. I don’t know which one to apply until after I file my case. So I always pick the highest one possible.

Of course you thought of all these things, right?  That’s why you don’t need a lawyer to file a chapter 7 case. It’s easy, just fill in the forms.

Full post as published by Bankruptcy Law Network on March 24, 2010 (boomark / email).