Calculating DMI: Means test or Schedules I & J???

[shark66]

justbroke wrote:

It always surprises me, well maybe not anymore, when a debtor comes on this Forum and complains that the Attorney doesn't want to fight. Only to learn that they retained the "cheap" mill attorney who only does simple cookie-cutter "no-look" cases.

You're absolutely correct. However, one thing to bear in mind is that certain states (I'm in PA and that applies here) have a cap on what an attorney can charge in a BK case. For a flat rate of $1500 (includes filing fees) one can't really expect to get much.

That would probably be one of the reasons that I was less than impressed with a couple of attorneys that I've seen, and ended up filing pro se.

My $0.02 only...

[justbroke]

They are not caps, they are called "no look" fees. This is the "reasonable" fee for most cases. However, an attorney can always submit a fee application where the case warrants more diligence, time, effort.

[shark66]

@justbroke:

I stand corrected. Thank you for clarification.

I've read enough of your posts to be convinced that you know what you're talking about when it comes to the matters of BK.

With that said, I've been told in no uncertain terms that "there's a legal cap for what we (attorneys) can charge you for representation in bankruptcy cases"...

I guess I was correct for following my gut feeling and not hiring that particular individual to represent me.

Thanks once again.

[chriselle]

this is an interesting thread.

http://www.bkforum.com/showthread.php?p=368494#post368494

[justbroke]

With that said, I've been told in no uncertain terms that "there's a legal cap for what we (attorneys) can charge you for representation in bankruptcy cases"...

I agree that there is a "cap" but it's not legal and it's just a threshold. The threshold meaning that the attorney has to submit a "fee application" to the court for approval. No court could ever impose a "no look" fee on a complex case. No one would ever take them. So long as the case looks like "A" then the no look fee schedule applies. When the case gets complex and looks like "B" and "C"... the attorney files a detailed fee application. (Some Districts require a fee application no matter what, even if routine and "no look".)

Is the "cap" a hard limit. No. Will most attorneys exceed the cap? Probably not.

I won't say that attorney don't have problems with charging more than the local guidelines and no-look fee schedules. So, did the attorney you ended up going wtih charge you more than the standard fee? Was your case complex?

[shark66]

@justbroke:

I ended up filing pro se.

Was my case complicated? Yes and no. I'd call it somewhat unusual rather than complicated.

My bottom line is trying to strip the second mortgage. That's why I'm in Ch. 13 although I could've qualified for Ch. 7.

I have barely any (compared to most posters here) unsecured debt. I do have mortgage arrears on first - another reason for 13 instead of 7.

Have my 341 scheduled for May 10th. Wish me luck because God knows I'll need it...then again...audacius fortuna iuvat...

Thank you once again for all the great postings, they've been a source of tremendous inspiration and comfort.

[Fedor]

Appreciate all the discussion, although it sounds like a bad trustee and questionable lawyer is the ultimate bad situation, and that's where I'm at (I know about our trustee).

I'm over the median, and eventually getting into a ch7 isn't going to happen.

Here are my options, basically:
1. Go through with the current plan: 100%: ~1800/mo (x60)
2. Try to refile in 5 months: due to income dropping off, this would be 55%: ~900/mo x60

If I would need to repay my lawyer everything (if I went with option 2), I'd be looking at lawyers again. 1800/mo is probably not feasible; 900/mo is definitely feasible. If I would've filed in Dec (which I asked him in Dec, and heard 'it doesn't matter'), I'd be around 900/mo right now (forfeiting bonuses, probably, but that's ok).

My other major concern is getting sued. Do the chances go up if we file, then dismiss immediately? We'd have to wait 4-5 months.

I've heard about the 2nd filing being challenged as an abuse of the system, but my annualized income from 6mo lookback is more than I will make this year (by ~$6k). If I refile in 5 months, I'd argue that my original/first filing was unfair due to the income, and my 2nd filing is a more accurate representation of my income. This, along with the agreement that annual bonuses are turned over, seems like a valid argument.

Agree/disagree?

Thanks again for all the wisdom on this forum; I'd be better off if I'd have listened to advice here than from my lawyer (but it differs so much depending on location, so I listened to my lawyer).

-- Fedor

[Skipper]

Appreciate all the discussion, although it sounds like a bad trustee and questionable lawyer is the ultimate bad situation, and that's where I'm at (I know about our trustee).

I'm over the median, and eventually getting into a ch7 isn't going to happen.

Here are my options, basically:
1. Go through with the current plan: 100%: ~1800/mo (x60)
2. Try to refile in 5 months: due to income dropping off, this would be 55%: ~900/mo x60

If I would need to repay my lawyer everything (if I went with option 2), I'd be looking at lawyers again. 1800/mo is probably not feasible; 900/mo is definitely feasible. If I would've filed in Dec (which I asked him in Dec, and heard 'it doesn't matter'), I'd be around 900/mo right now (forfeiting bonuses, probably, but that's ok).

My other major concern is getting sued. Do the chances go up if we file, then dismiss immediately? We'd have to wait 4-5 months.

I've heard about the 2nd filing being challenged as an abuse of the system, but my annualized income from 6mo lookback is more than I will make this year (by ~$6k). If I refile in 5 months, I'd argue that my original/first filing was unfair due to the income, and my 2nd filing is a more accurate representation of my income. This, along with the agreement that annual bonuses are turned over, seems like a valid argument.

Agree/disagree?

Thanks again for all the wisdom on this forum; I'd be better off if I'd have listened to advice here than from my lawyer (but it differs so much depending on location, so I listened to my lawyer).

-- Fedor

Hi Fedor,

Wouldn't amending your plan when your income drops off be feasible? Or is it unsustainable now?

Skipper

[LadyInTheRed]

The plan is supposed to be based on your current income. Bankruptcy Code Section 1325(b)(2)

I think I read that there is some inconsistency in the language of the law that has resulted in some litigation on this topic, but I don't remember the outcome or how high it has gone in the courts. If your decrease in income is permanent, it doesn't make sense to confirm a plan based on your past 6 month's income. It would be doomed to fail. It would be a waste of everybody's time to have that plan confirmed when you know you will have to amend it. I guess many trustees don't always take logical positions.

Now, if the decrease in income is because you had a big bonus and you are likely to get bonuses in the future, that could be the problem. But, you could ask your attorney to propose to the trustee that you use your current income on the condition that any bonus over a certain amount be turned over to the trustee.

If your attorney is not willing to submit a plan based on your current income, mention section 1325(b) and ask him for contrary legal authority to back up the position that you have to use the means test income.

[Fedor]

The plan is supposed to be based on your current income. Bankruptcy Code Section 1325(b)(2)



I think I read that there is some inconsistency in the language of the law that has resulted in some litigation on this topic, but I don't remember the outcome or how high it has gone in the courts. If your decrease in income is permanent, it doesn't make sense to confirm a plan based on your past 6 month's income. It would be doomed to fail. It would be a waste of everybody's time to have that plan confirmed when you know you will have to amend it. I guess many trustees don't always take logical positions.

Now, if the decrease in income is because you had a big bonus and you are likely to get bonuses in the future, that could be the problem. But, you could ask your attorney to propose to the trustee that you use your current income on the condition that any bonus over a certain amount be turned over to the trustee.

If your attorney is not willing to submit a plan based on your current income, mention section 1325(b) and ask him for contrary legal authority to back up the position that you have to use the means test income.

Great information, which I will act on. The forum actually seems like a needed friend at times; thanks.

I'm guessing my next actions are:
1. Talk to a new lawyer to see if they can give advice on my situation (possibly w/a small fee; large fees aren't good).
2. Talk to my lawyer about modifications or, if necessary, the process of refiling later (and hopefully, don't get sued in the interim).
3. Send the check to the trustee (1st check due in 2 weeks). Don't want to miss first payment unless I've got a new plan of action with my attorney (current, or new, if necessary).
4. Read this forum nightly, and post results, and questions (many questions). Everyone's input is appreciated!
5. A beer or two...

-- Fedor

[justbroke]

While the code reads the "dispsable monthly income" (DMI) is based on the current monthly income (CMI) calculation, the overwhelming majority of courts agree that the DMI is a "starting" point, not the number. While Trustees will "object" to a plan being confirmed, this doesn't mean that the plan can't be confirmed. The Court is the entity that confirms plan, not the Trustee!

A plan can be confirmed over the Trustee's and creditor's objections. Every court that I know of agrees that the Means Test, which calculates the CMI and DMI, is an arbitrary bright-line test based on "prior" information to predict the future (in a Chapter 13). It's ridiculous if you ask me.

This is why pro se debtors need to understand whether their local District uses the Means Test or Schedules I/J for determining the DMI (when over the median). Understanding whether income needs to roll off, of if the Court allows the Debtor to just show that their income has already rolled off and file with a lower DMI. Personally, I hate the inconsistency between the Districts.

[LadyInTheRed]

Great information, which I will act on. The forum actually seems like a needed friend at times; thanks.

I'm guessing my next actions are:
1. Talk to a new lawyer to see if they can give advice on my situation (possibly w/a small fee; large fees aren't good).
2. Talk to my lawyer about modifications or, if necessary, the process of refiling later (and hopefully, don't get sued in the interim).
3. Send the check to the trustee (1st check due in 2 weeks). Don't want to miss first payment unless I've got a new plan of action with my attorney (current, or new, if necessary).
4. Read this forum nightly, and post results, and questions (many questions). Everyone's input is appreciated!
5. A beer or two...

-- Fedor

I suggest the following modified plan:

1. A beer.
2. Sleep
3. Talk to a new lawyer to see if they can give advice on my situation (possibly w/a small fee; large fees aren't good). [Maybe you can get a free consultation. Or, try your local bar association for referral to a low cost consultation. They do that here for less than $50 last I knew - maybe $25 or $30??.]
4. Talk to my lawyer about modifications or, if necessary, the process of refiling later (and hopefully, don't get sued in the interim).
5. A beer or two...
6. Send the check to the trustee (1st check due in 2 weeks). Don't want to miss first payment unless I've got a new plan of action with my attorney (current, or new, if necessary). DON'T MISS THAT PAYMENT!
7. A beer or two or three...
8. Eat something yummy
9. Sleep
10. Read this forum nightly, and post results, and questions (many questions). Everyone's input is appreciated!
11. A beer or two...
12. DANCE!! It's fun and good exercise!

[LadyInTheRed]

Personally, I hate the inconsistency between the Districts.

Isn't there something in the constitution called the equal protection clause???

[newstarts]

Means Test vs. Schedules I/J

This is why pro se debtors need to understand whether their local District uses the Means Test or Schedules I/J for determining the DMI (when over the median). Understanding whether income needs to roll off, of if the Court allows the Debtor to just show that their income has already rolled off and file with a lower DMI. Personally, I hate the inconsistency between the Districts.[/QUOTE]

New to this forum with lots and lots of questions. Is it correct that local Districts can use EITHER the Means Test OR Schedules I/J for determining DMI when over median? We are over median by about $3000. We also have an RV that we still owe $12000 on. If we can include that RV payment in the secured portion of the means test, we will pass the presumption for filing Chapter 7. We also have a washing machine, couch, gas stove, computer and TV that were financed over the past 2 years that we are still making payments on. Can we include those payments also in the secured portion of the means test? We are in upstate New York and will be filing in the Northern District of NY. Thanks to all who post to this forum! I've learned lots already

[justbroke]

Since the RV payment allows you to file a Chapter 7, you could do that. However, it is highly likely that the Trustee would fight the RV payment -- unless it's your primary residence -- as an abuse of the a Chapter 7, since it's not necessary for your reorganization and that it is a "luxury" item.