New Member, I have several questions...

[Mr. H.]

Yesterday our lawyer did the means test for us. As some of you know, my mother-in-law lives with us, but does not pay us anything. She pays for her car, credit card, car insurance etc. Because she does not contribute anything towards the house, as such, he included her as a dependent within the household but did not include her salary when calculating the means test.

Q1: Does this sound right?

Now that we had 3 dependents and including both cars, he found that we were +100, but after listing our payment at $190/mo we dropped to -90. We are negative.

Q2: What does this mean? He seems to think that the trustee would not really challenge this amount and if they did, the amount would be easily defended.

However, by keeping both cars and now making a trustee payment of $190/mo, we would be left with about $500/mo left. There is no way that we can live on that amount. So, it looks like we would have to get rid of one of the cars. This would eliminate around $340/mo in bills, between car and insurance bills. However, this would put us over the means test by about $100 with our payment still remaining at $190/mo.

Q3: What does this mean?

Q4: Would our payments go up an additional $340/mo even though we are strapped with $500/mo left?

As one solution, the lawyer suggested that there is a part time job to make up the difference, $340/mo car bill.

Q5: He said that if we filed in August, the additional income would not count against the means test. Is this true?

Q6: Would this additional income change our trustee payments down the road?

Thanks again.

[lrprn]

Welcome to BK Forum, Mr H!

1: Does this sound right?

It is very unusual for a healthy adult to live in a family member's home and contribute nothing to help pay for expenses, especially when the adult has money of their own coming in regularly. Because it's so unusual, since you've listed your mother as a member of your household for filing purposes yet she contributes nothing to your filing income, there's a good chance your trustee will challenge this. If he/she does, then you will have to prove that your mother does not give your family any money at all - that will be a challenge.

Now that we had 3 dependents and including both cars, he found that we were +100, but after listing our payment at $190/mo we dropped to -90. We are negative.

I'm confused....what payment is $190/month? Your calculated Ch 13 payment on the Means Test or Schedule I&J? (And I can't answer the rest of your questions because I don't understand the reasoning here yet.)

You and Mrs. H live in NJ. What did the lawyer calculate your family of three's last-six-month gross income to be for the Means Test?

Glad you came here to ask your questions, Mr H. We'll help you and Mrs. H sort things out as best we can. Welcome to BK Forum!

[Granny]

I can only tell you what happened with my trustee and my grown daughter who was living with us when I filed.

First the trustee asked for our tax returns and then questioned me about the dependents on my tax return vs the dependents I claimed for the means test and Sch J. She wanted to know why I was claiming her on the means test but did not claim her on my taxes. I explained that I can not deduct her on my taxes because she was 25 years old and not in school. The trustee then asked about her income and I stated that it was minimal because she doesn't work most of the time and the trustee wanted to know why. Without going into details, I just said she has her own issues. I think the trustee got the unspoken message there when she learned that we had adopted our grandkids. Nothing more was ever said about my daughter.

There are others here that can better answer your other questions but I think they are going to say, it all depends on the trustee that you get and your attorney will know how the trustee will react.

[Mr. H.]

Thank you for responding...

Let me clarify, the lawyer ran the numbers for Form 22C of which our gross income for the past 6 months was $46,111.

After using 3 dependents and taking our standard IRS deductions, we were +100. He then factored in our payment of $190 which made us -90. From this, the lawyer was very sure that we could get the payment of $190.

However, I thought that a negative means test meant that Schedule I and J could then be used to calculate your payment.

The problem that we are having is that during the past 6 months, I have been working overtime to pay for our bills. The overtime was then abruptly taken away. The result is that we are showing a 6 month take home average of $5,586. But, in fact, we are actually taking home $4,824. This difference of $700 is causing the problem. We could wait another 2 months that would bring our take home amount to $5,475 for a difference of $600.

I hope this clarified some of my questions...

Q1: How long before creditors start to sue us and force us to file? Currently, we are two months along and are just getting phone calls and some letters saying "you forgot us"...

In order for this to work at all, we need to get rid of the SUV. The lawyer is saying that this would increase our payment by making us positive for the means test.

Q2: Does anyone have any experience turning a leased car in early before filing for BK?

Thanks again, sorry for all these questions...

[Mrs. H]

So -

(I can tell you that Mr. H. is now going to bed.)

My question is this -

Why did the lawyer put the trustee amount INTO the Means Test instead of getting his answer FROM IT? He PUT IN the $190. Why?

From everything I have read on here, I thought that it is the other way around. The Means Test gives you your answer.

(I asked husband this. He said he doesn't know.)

So, that's all I'm going to add to this. For now.

Note to self - try to stay out of husband's threads.

Now we know that's going to be impossible...

Mrs. H.

[CityGirl]

I make 1/2 of what you guys do and have to pay $800/mo so I'm not sure what to tell ya..sorry!

[SinkingFast]

I'll take "Name that Number" for $200, Alex!

Could the $190 you're talking about be the Trustee's Administrative percentage?? Where we live, that 7.6% of your "Proposed" monthly payment. For NJ, it's 5.8% for the Administrative Multiplier.

http://www.usdoj.gov/ust/eo/bapcpa/2...xp_mult.htm#NJ

On Line 45, the attny probably entered a $$$ amount as your "Proposed Plan Payment". Then entered your Multiplier of 5.8%. Possibly that's where the $190 figure came from.

[HHM]

Ok, your posts are confusing but that is not your fault, BK can be confusing.

Is there any particular reason you need to file Chapter 13 (aside from having above median income), i.e. behind on payments on your house, etc?

What is the total Chapter 13 monthly payment your attorney is propsing?

Are your "actual" expenses higher or lower than the Census/IRS standards?

As far as you know, do you have non-exempt assets, and if so, what is the value?

What is your income for TOTAL, COMBINED, GROSS income for the last 6 months?

[lrprn]

Let me clarify, the lawyer ran the numbers for Form 22C of which our gross income for the past 6 months was $46,111.

The New Jersey annual median income for a family of 3 is $80,239 - see http://www.usdoj.gov/ust/eo/bapcpa/2...come_table.htm

Doubling your six month income $46,111 x 2 = $92,333. This is WELL OVER the median for a 3-member family in New Jersey....in fact, you are $12,094 over the median.

I have no idea how your lawyer came up with you being only $100 over the median just by this alone - that's just not possible. Now if he ran the entire Means Test and Schedules and THEN came up with $100, then that might make sense. But you don't get to subtract taxes, etc from the amount of income you have and then apply that figure against the state median income - that isn't how this works.

I strongly encourage you to see 2-3 other bankruptcy lawyers in your area before filing, because there's something odd going on here. You want your filing to be right the first time. Fixing problems after filing is difficult and can be quite costly, especially if you file Ch 7 and you are well above the median income for your state.

Set up those free 2-3 consultations with other bankruptcy lawyers in your area as soon as possible! If what your current lawyer has said is correct, then you'll confirm that. But if he's wrong, you can save yourselves a world of hurt and possibly thousands of dollars.

[HenriettaHen]

If Mr and Mrs H are current on home and cars, why wouldn't they be candidates for Chap 7?

I'm guessing arrears on the huge mortgage. Even one month with those payments ....

??

[Mrs. H]

-

Just checking in for husband. He said he will try to answer back later.

(Should have known that this was going to happen. Well, it was MY idea...)

I only saw the last post - so quickly...

HH -

Actually, we are totally current on both mortgages and both of the cars and always have been.

That's our top priority - all we're trying to wipe out is the credit card debt by doing this. Paying them has been the struggle since the overtime money is now gone - perhaps never to return.

We haven't used the credit cards for months anyway and actually haven't had to cut down on much. It's just working with $500 a month that would be a problem. (Again that's for food, meds, gas for cars and the cat bill - one with diabetes.) I need to pull the other $300 or so out of somewhere.

We don't go out, except for stores and work, and don't eat out anymore. It has turned our attention to even more things at home. Being perfectionists with cats is a challenge, even though they're really well behaved! We use more time to clean. Perhaps we've already adjusted to the new lifestyle?

So, I'd better let him answer the rest, since I have to get going! The above was supposed to be short. Welllllllllll...

I will urge him to get on here later. I'm sure everyone is eagerly awaiting...

Ahem.

Mrs. H.

[Mrs. H]

Back again - for one second!

I thought that I should mention this...

At the realization that something had to happen with money - like bankruptcy - I actually called all the apartment complexes in the area just to find out who accepts cats. Because they're not going anywhere except for with us.

It seems like the running theme with all the lawyers is to keep the house. No one has blinked at the mortgage yet. I do agree that it's high. Husband will not entertain the thought of moving. (He bought the house at the age of 24 with no help from family. That's 10 years before we even met.)

My thoughts are - if my husband's job ever goes, then I guess it's the apartment route for all of us. Mom and cats, too. The place would need to be a good size then. Maybe rent a house.

I just wanted to mention that the thought is always in the back of my mind. Never lived in an apartment, but I'm sure we could adjust.

OK - now, really must go again...

Mrs. H.