Bad News...Trustee says we are "the test case"

[dovette7]

Ok after my long post yesterday and hoping for better news today. There is bad news. Our trustee has decided that our case needs to be heard in court because we are high income filers and cannot pay the "pool of funds". He believes we cannot pay what means test or pool of funds says. So ours will be the "test case" to determine new law.... Good news is trustee is in our favor. There is no other case like ours to compare to so we go to court next week. Other bad news...attorney will charge us additional because this is not a regular bankruptcy case. Everyone before us that were in our position had their case dismissed at this point. So now if move forward, we have to come up with that money???

The head attorney called me and said that this has turned into a nightmare because the new law didn't cover filers with circumstances like ours. So we are the "case"

Trying not to cry and crawl into a fetal position..... I know we've done everything we can do. Now we just wait again until next week and go to battle. (If we can figure out a way to pay attorney)

[SinkingFast]

Getting a Hearing is a victory of sorts!

At least your case was not summarily dismissed.

The extra money due the attny,............... Can they just put that into your plan?? Or is that a No because your Plan "won't be paying enough" anyway??!!

Good Luck, Dovette!! May God be watching over you at the Hearing.

[CindyLou]

I know its complicated, but it actually sounds like good news to me. The trustee obviously feels your case is justified!!

[dovette7]

that maybe why, I was in shock and didn't ask all the questions I needed to today. In the submitted plan, where it talks about attorney fees, there is a section for "non-base services" It is too confusing to understand but it would seem like I should be able to do that. I'll ask tommorrow.

This is socrazy. All I can think of is that there is a "plan to prosper me and not harm me" and maybe we're here to potentially help somone else in the future with a favorable ruling that could change the law. Of course my concern is we get to court and the judge does not rule in our favor. We will be forced to dismiss this case. Then what? Everyone comes running at me at once?? I'm so tired and worn out from this. I'm 37 and feel much much older...looking it too. I'm too tired to even worry about all this right now. I'm just trying to get all my expense documents ready.


Thanks to all of you who pushed documentation. I listened and am ready.

[lrprn]

We will all be there with you in spirit, Dovette - here's a virtual <hug>, only wish I was there to deliver it in person.
Sounds like your trustee and bk court judge are trying to bring some sanity to a very badly written bk law that is hurting you and others in your area. Sorry you have to be a test case for your district (we're in the same spot...it *is* unnerving!), but as SF said, your case hasn't been dismissed and that could have been the outcome here. Hang in there, pile on the documentation, and we'll all be praying for good news!

[anonymuse]

What are you referring to with "pool of funds"--your available income to payback creditors? Is it just a few percent? We've seen 1% payback on these boards.

[dovette7]

I had not heard "pool of funds" until this week myself. Pool of funds is the amount the means test Line 58 says I should be able to pay per month to unsecured creditors X number of months in plan.

Our pool of funds says $2550 per month X 60 months = $153,000, that is to unsecured only. Our total unsecured debt is $135,000. Because our proposed plan payment based on actual expenses is a TOTAL of both secured and unsecured of $1560 (which is approx 16% to unsecureds for $21,600) the trustee objected:

Pursuant to the disposable income calculation on Form B22C, the unsecured pool in the Chapter 13 plan is less than that required by 11 U.S.C. Section 1325(b)(1)(B)

Basically our plan isn't paying what the means test shows I could pay to unsecured therefore he objected.

I thought that if the means test shows a certain amount of dollars left to pay unsecured creditors, that the attorneys and trustee compromised and worked on a feasable realistic plan that incorporated actual expenses since the Means Test are not real expenses. I think that does happen but not with us.

Because our's shows a large amount we "could" pay, we are high income filers with high debt, and our plan payment is half of this number....trustee isn't confirming plan but says case needs to be heard. Attorney said in our district there is no other case like ours that has been heard.

[aa06a47]

It kinda sounds to me like your not paying to the unsecured creditors what they would get in a chapter 7 bankrutpcy. How much in your claimed assets are not covered by exemption?

[dovette7]

All assests are excempt. A couple of issues are:
1. Income shows my husband's income PLUS that I made $1660 a month average over last 6 months. I make $0 now.

2. There is now additional $689 taxes a month that has to be saved. That is not on means test or Scheduale I. Attorney says we cannot add those now on those forms because they weren't taken out for last 6 months. But they weren't taken out the last 6 months before filing because we were paying a mortgage which would have allowed the interest to be deducted from taxes. Now we rent and do not have that deduction so our taxes went up.

3. The 401K loan that was taken out for last 6 months is not included on means test..(don't know why and have email into attorney asking)

So it is very confusing. The means test showing what we could pay vs what Scheduale J shows we can pay is a difference of $1463 a month. This is where the argument comes to play. Trustee sees that in reality we cannot pay what means test shows, but his hands are tied based on the law so therefore a judge must decide if we have to pay what means test says (even though it is not "real" or feasabile OR set a payment based on real verified expenses.

[CATCHMEIFYOUCAN]

Test Case

All assests are excempt. A couple of issues are:
1. Income shows my husband's income PLUS that I made $1660 a month average over last 6 months. I make $0 now.

2. There is now additional $689 taxes a month that has to be saved. That is not on means test or Scheduale I. Attorney says we cannot add those now on those forms because they weren't taken out for last 6 months. But they weren't taken out the last 6 months before filing because we were paying a mortgage which would have allowed the interest to be deducted from taxes. Now we rent and do not have that deduction so our taxes went up.

3. The 401K loan that was taken out for last 6 months is not included on means test..(don't know why and have email into attorney asking)
My 401k loan payments were included! Better check on THAT! I had about 6-700 "exempt." Otherwise it would have been part of my disposable!

So it is very confusing. The means test showing what we could pay vs what Scheduale J shows we can pay is a difference of $1463 a month. This is where the argument comes to play. Trustee sees that in reality we cannot pay what means test shows, but his hands are tied based on the law so therefore a judge must decide if we have to pay what means test says (even though it is not "real" or feasabile OR set a payment based on real verified expenses.
Mine was a "TEST CASE," too to be sent to the judge to decide. My Means Test showed NEGATIVE $60 bucks. Schedules I and J showed $800 disposable income. Going by the New Law my lawyer proposed $250. The Trustee objected and wanted the $800 - who cares about what the New Law says by the Means Test. Well I went before the judge and the judge didn't want to rule either way, he said it wasn't up to him to side step congress' intention but that I should resubmit another plan a little higher than I proposed (not necessarily $800) or QUIT one job and convert to ch7 and pay NOTHING ! Well, hmmm YOU DO THE MATH. It made more sense to quit one job and suffer with less income for a month or so than the next 5 years!

Best of Luck, Catchmeifyoucan

[DeadManCrawling]

I had not heard "pool of funds" until this week myself. Pool of funds is the amount the means test Line 58 says I should be able to pay per month to unsecured creditors X number of months in plan.

Our pool of funds says $2550 per month X 60 months = $153,000, that is to unsecured only. Our total unsecured debt is $135,000. Because our proposed plan payment based on actual expenses is a TOTAL of both secured and unsecured of $1560 (which is approx 16% to unsecureds for $21,600) the trustee objected:

I think I might, MIGHT, see where the trustee is headed here, and if so, it really IS good news for you. Accordig to the above, a 60 month plan would actually pay unsecureds MORE than you OWE them. However, the below seems to be contradictory. It makes no sense, in light of your circumstance, and only sets a LOWER LIMIT on chapter 13 payments with no MAXIMUM to unsecureds. That is, it appears to be LEGAL that the unsecureds get more than they were owed in the FIRST PLACE.

Pursuant to the disposable income calculation on Form B22C, the unsecured pool in the Chapter 13 plan is less than that required by 11 U.S.C. Section 1325(b)(1)(B)

If this is in fact the case, please do let us know. This could be fascinating for us to watch. Not so much for you, I know, but wowsers.

BK with unsecureds getting "extra money"? Correct me if I somehow misread this (I hope that is the case) as this sounds unbelievable.

DMC

[DeadManCrawling]

O, okay. I just reread, and see the thing I missed. I am relieved I guess.

The only other take on it would be that your assets you plan to retain are worth more than $21,600 which means unsecureds could object (and likely win) since they are receiving less than they would in a chapter 7.

I dunno. My mind is numb today.

DMC

[dovette7]

But the assets aren't in question here, because there are none.

The way my attorney explained it is that what the means test shows I have to pay to unsecureds is $2550 per month X 60 = $153,000 (pool of funds) that since I only owe $135,000 that I should be in a 100% payback plan. With secured payments of $1200 + unsecureds of $2550, my payment would be a total of $3750.

With my real expenses on Scheduale J and my income on Scheduale I:
My "feasable and realistic" payment would be $1560 total.

So there is $2190 per month I CANNOT pay based on my reality VS what the means test says I have to pay. Therefore Trustee cannot confirm case because of the law, but is on my side because he knows there is no way we can pay what means test says. Therefore Judge has to determine.



Another crazy part is that on the means test, you have to use last 6 month income. But when filling out the form, I didn't use past 6 month expenses. I had cut our daycare from $801 per month to $450 per month. My health insurance cost was cut $106 per month. That would've lowered disposable income, however I used currant numbers NOT the last 6 month numbers.

Now I realize:
If I would've added the additional taxes of $689 per month to payroll deductions before I filed....waited 2 months so my previous 6 month income would've been reduced from $1660 to $417: The means test would've shown I could pay $617 towards unsecured creditors. With the $1200 to secureds plus $617 = a total plan payment of $1817. I can do that. But that is not what happened.

So my attorney told me that they have to argue NOT to use means test as the determining factor of payment amount. To only go by what Scheduales I and J show we can pay because that is the reality.

[aa06a47]

Not to worry, you will win this one. It may be a test case for your district, but I believe I have read somewhere this very same thing with a ruling....... Unless you have a bad ass judge, shouldn't be a problem.

I would say there are very few people actually paying what the means test shows, some more, some less. I'm actually paying about $35.00 month more than the means test shows....my luck....

[dovette7]

Thanks for the support. I sure hope so...gotta have faith right now in the midst of all this whirlwind around me. In normal cases, does the trustee decide the payment based on means test and scheduale j? That's what I thought. Ch 13 cases from people on here.... where did the actual payment come from? I guess my trustee does not or feels he cannot decide a payment that would be so much diffrence in means test and scheduale j.

I still am confused as to why we have to argue it because I thought that trustee determined payment.
I think my attorney's feel I am too involved and want to know EVERYTHING.. which apparantly their other clients don't. But I really do want to know EVERYTHING and UNDERSTAND EVERYTHING.