Seen a Bankruptcy Lawyer today and have many questions.....

[gman]

Means Test I get it over by $11.00 a month -- with projected payment just being shy of $700.00. Yes I owe about $15000 in taxes, but that was already calculated as Priority and in that payment, along with my car and attorney's fees.

So you have a positive DMI on the Means Test of how much? Around $200? (Making sure I understand what being over by $11 means...)

Can you make sure you owe MORE back taxes in January of 2011? If you follow my idea - you will see how you can legally drive down your DMI on the Means Test.

Remember, the same thing with taxes runs in reverse. Many people here are worried about "keeping their tax refund." My suggestion - DO THE OPPOSITE!

[FishersMike]

The DMI on 22C says I have DMI (after paying all secured) about $11.00 a month. I think I may be getting a little tax refund this year (which IRS will keep) because until around August of this year they made me claim 0 deductions (forced employer). I was able to get changed to two now...... also is there a website I can calculate the correct tax withholdings since I here Trustee goes by this for deductions rather than what you are actually claiming. This will help me because my State is wrong showing 9 deductions but I have not changed it yet as I cannot do online at work.

[LadyInTheRed]

Hi Lady,

Okay I guess I have been confused too. I thought I read here that most Trustees make your plan payment off the 22C Means Test. So okay all the money I need to make for everything secured is about $700.00 -- so I need to have the Schedule J show at least $700.00 net income == so let's say it shows $750.00 net income - that would mean that my plan payment is $750.00 regardless of the DMI or plan payment figured on the 22C? So essentially 50 a month going to unsecured?

Also 401k voluntary contributions and loans can be deducted on line 55 of 22C -- where to we list on schedule J, other expense? Or do we not list it here and make it seem as though our monthly net is higher? Thanks!!

Michael

Sorry. When I was looking at my means test, I missed line 55, so didn't see anywhere where the 401k loan was deducted. Also, I wasn't very clear on the means test issue. I believe if you are over median, you need to keep the schedule J figure equal or below the 22c figure, but I'm not certain about that. I think there may be some conflicting case law about whether your plan can use actual reasonable expenses instead of the means test. It may depend on how the issues has been ruled on in your district. Maybe somebody else will chime in on that.

What you will be allowed for a 401k contribution depends on your district. I was allowed both the loan payment and a contribution, but the total of the 2 is about 5% of my salary which is a pretty low contribution. Also, my means test DMI was negative, so that may have given me more leeway. If you have a history of both the contribution and the loan payment and can afford it, I'd try for it. But, you may need to leave it off to show higher net income on Schedule J. You may not be able to afford to fund a Chap 13 and make a 401k contribution.

If you are really in a position where you cannot qualify for a 7 and can't come up with a workable Chap 13 plan, I'd suggest finding an attorney who is willing to fight for a Chap 7 and take your case through appeals if necessary. But, first you need to consider giving up the cars and quads (it is you who has those, right?). You haven't said what the monthly payments are on the secured assets. But if your 2 cars are worth $60K, I bet you can find less expensive cars that are reliable.

ETA: I posted the above thinking I was replying to the OP (Guest123). Sorry for the confusion.

[FishersMike]

I would not file a Chapter 7 if you paid me
It would not work for me in my circumstances. Here are my circumstances:

I have one vehicle worth about $21,000 (if I use high value guide books) and loan is $22,600 through Chrysler. It is a 2007 Jeep that I have a Lifetime Warranty on it -- full warranty that covers everything, not just PowerTrain, so no need to give up this car for a newer one - it has about 40,000 miles on it.

I do not have any other secured property.

I owe about $18,000 in back taxes with IRS & State. However, thanks to JB he advised that the Penalty & Interest on Penalty would be moved to un-secured so I am just guessing high to say my secured portion is about $15,000.00

I will also have the balance of my attorneys fees in it, so about $35.00 a month.

My district charges 9.1 percent Trustee fee.

So I could get my expenses even though over median to allow me to do a Chapter 7 but I need a vehicle and I need interest to stop occurring on tax debt.... plus want the penalties removed and pay off the debt in 5 years. If I were to go on payment plan with IRS I would never have it paid off.

The good thing is my Jeep payment was $599.00 a month, which I have been making. So about $100.00 more a month I can pay the Jeep and Government -- and wipe my un-secured debt in the same process.

[LadyInTheRed]

The DMI on 22C says I have DMI (after paying all secured) about $11.00 a month.

I think some other more specific figures may help us all see your situation more clearly. For each of your secured loans, it would be helpful to know the value of the asset, balance due and monthly payment.

ETA: Again, thought I was repying to OP.

[LadyInTheRed]

Sorry, Michael. I was confusing you with the OP.

I think I'll go back to work now!

[FishersMike]

I think some other more specific figures may help us all see your situation more clearly. For each of your secured loans, it would be helpful to know the value of the asset, balance due and monthly payment.

Submitted figures while you were typing response

[LadyInTheRed]

Submitted figures while you were typing response

Decided to re-read your posts before going back to work and give you a less confusing answer based on your situation. You can adjust your expenses on Schedule J to show enough net income to your minimum necessary plan payment. Just make sure you can live with the plan.

My means test showed over $300 negative DMI, but my Schedule J showed positive $500 so I could fund a plan that paid my car loan, trustee fees and attorney fees. One place where I reduced expenses is on my car expenses because I bought a maintenance contract that will cover all maintenance for the next 5 years. My trustee doesn't require the car be paid in the plan, but my attorney said we should do that to "throw the trustee a bone" so there was something on which she could charge her fee. I did have a pretty high medical expense that the paralegal was a bit concerned about and said I'd need to provide documentation. But, the trustee never asked about it. I think the fact that my Schedule J net income was higher than my means test DMI helped get me through without a lot of scruitiny.

Okay, now I am going back to work!

[gman]

The DMI on 22C says I have DMI (after paying all secured) about $11.00 a month. I think I may be getting a little tax refund this year (which IRS will keep) because until around August of this year they made me claim 0 deductions (forced employer). I was able to get changed to two now...... also is there a website I can calculate the correct tax withholdings since I here Trustee goes by this for deductions rather than what you are actually claiming. This will help me because my State is wrong showing 9 deductions but I have not changed it yet as I cannot do online at work.

free website

https://www.paycheckcity.com

[gman]

I would not file a Chapter 7 if you paid me
It would not work for me in my circumstances. Here are my circumstances:

I have one vehicle worth about $21,000 (if I use high value guide books) and loan is $22,600 through Chrysler. It is a 2007 Jeep that I have a Lifetime Warranty on it -- full warranty that covers everything, not just PowerTrain, so no need to give up this car for a newer one - it has about 40,000 miles on it.

I do not have any other secured property.

I owe about $18,000 in back taxes with IRS & State. However, thanks to JB he advised that the Penalty & Interest on Penalty would be moved to un-secured so I am just guessing high to say my secured portion is about $15,000.00

I will also have the balance of my attorneys fees in it, so about $35.00 a month.

My district charges 9.1 percent Trustee fee.

So I could get my expenses even though over median to allow me to do a Chapter 7 but I need a vehicle and I need interest to stop occurring on tax debt.... plus want the penalties removed and pay off the debt in 5 years. If I were to go on payment plan with IRS I would never have it paid off.

The good thing is my Jeep payment was $599.00 a month, which I have been making. So about $100.00 more a month I can pay the Jeep and Government -- and wipe my un-secured debt in the same process.

Other than the cram down on your car loans - why would you want to do a 13 as opposed to a 7 - seeing you have no "property" to protect?

Just curious as most of us here see 7 as a gazillion times better than living under the thumb of a trustee for 5 years. 5 years is a long time....and if the cost of living goes up and/or your income goes down - then you will struggle completing your 13. Not saying it cannot be done....just saying it has risks.

[Guest123]

Sorry. When I was looking at my means test, I missed line 55, so didn't see anywhere where the 401k loan was deducted. Also, I wasn't very clear on the means test issue. I believe if you are over median, you need to keep the schedule J figure equal or below the 22c figure, but I'm not certain about that. I think there may be some conflicting case law about whether your plan can use actual reasonable expenses instead of the means test. It may depend on how the issues has been ruled on in your district. Maybe somebody else will chime in on that.

What you will be allowed for a 401k contribution depends on your district. I was allowed both the loan payment and a contribution, but the total of the 2 is about 5% of my salary which is a pretty low contribution. Also, my means test DMI was negative, so that may have given me more leeway. If you have a history of both the contribution and the loan payment and can afford it, I'd try for it. But, you may need to leave it off to show higher net income on Schedule J. You may not be able to afford to fund a Chap 13 and make a 401k contribution.

If you are really in a position where you cannot qualify for a 7 and can't come up with a workable Chap 13 plan, I'd suggest finding an attorney who is willing to fight for a Chap 7 and take your case through appeals if necessary. But, first you need to consider giving up the cars and quads (it is you who has those, right?). You haven't said what the monthly payments are on the secured assets. But if your 2 cars are worth $60K, I bet you can find less expensive cars that are reliable.

ETA: I posted the above thinking I was replying to the OP (Guest123). Sorry for the confusion.

WOW did my thread get derailed!

I didn't see anywhere on the means test that let you input 401K loans or deductions especially when they are not mandatory, infact I have been told and read you can't add them in. But I have also read that some have.

Letting the quads go is not an issue, letting the cars go is.
The monthly payments on the cars are $560 and $520.
The quads is $300 for both but have a pay off of $8000 for both.
Buying new cars is not an option and doesn't seem like the best thing to do right now. Especially cheaper cars!
That will only allow for more DMI...I don't know how many times I can say that.
Less expensive cars would be lower monthly payments on the car and more DMI!
Buying more expensive cars and housing would help us qualify for ch7 as it would eat up the DMI.
We were already told that if we had more expensive cars/housing a ch7 wouldn't be an issue, but going out to buy cars we can't afford with the current debt we have doesn't look like a good solution to filing a ch.7 Not to mention I don't think the trustee would like that so much.

I don't see a ch7 being possible or a good solution.

I'm not sure how the Mods here would like me starting a few threads so can we please keep it on topic (my topic)!
Thanks

[FishersMike]

Actually on line 55 of 22C (Means Test) it specifically says voluntary 401k contributions/loans. So if you have any make sure you list them.

[Guest123]

Actually on line 55 of 22C (Means Test) it specifically says voluntary 401k contributions/loans. So if you have any make sure you list them.

I'll look that up now....Thanks

EDIT:

Just did the MeansTest and I must be doing a different one as I don't see a line 55 of 22c on there at all.
Line 26 states:
Mandatory payroll deductions
Enter the total average monthly payroll deductions that are required for your employment, such as mandatory retirement contributions, union dues, and uniform costs. Do not include discretionary amounts, such as voluntary 401(k) contributions.

[FishersMike]

I do not even need to cram down the auto loan -- the value to loan balance is very insignificant. The reason for the Chapter 13 primarily is to get the benefits of tax debt. In my circumstances I cannot discharge ANY of my tax debt, penalties, or interest in a Chapter 7. Very few people can get tax relief in a Chapter 7 because of all the requirements. So instead of owing probably $15k, I would still owe over $18k for taxes, interest would still incur, and I would have to make a payment plan that would make me make large payments (over $300 a month) for much longer than 5 years because of the interest...... plus if I went Chapter 7 I would have to give up the car or get a 727 Redemption Loan (high interest) which I heard US Bank won't accept SUV's for the loans anyway. I am sure my payment would be over $300 a month. Then they would go after my co-buyer, sister, for the Jeep deficiency balance. So no, Chapter 7 in my case would do no good, at all.

[gman]

I do not even need to cram down the auto loan -- the value to loan balance is very insignificant. The reason for the Chapter 13 primarily is to get the benefits of tax debt. In my circumstances I cannot discharge ANY of my tax debt, penalties, or interest in a Chapter 7. Very few people can get tax relief in a Chapter 7 because of all the requirements. So instead of owing probably $15k, I would still owe over $18k for taxes, interest would still incur, and I would have to make a payment plan that would make me make large payments (over $300 a month) for much longer than 5 years because of the interest...... plus if I went Chapter 7 I would have to give up the car or get a 727 Redemption Loan (high interest) which I heard US Bank won't accept SUV's for the loans anyway. I am sure my payment would be over $300 a month. Then they would go after my co-buyer, sister, for the Jeep deficiency balance. So no, Chapter 7 in my case would do no good, at all.

On the tax debt you could go the route of an OFFER IN COMPROMISE - effectively offering pennies on the dollar and see what they come back with.

You cannot make this "offer" after you have filed BK.

I am in a similar position as you - over median - over 15k in taxes - but also a bunch of unsecured debt - and very little assets to protect.

I have a car worth about 2k more than the loan...and am trying to reaffirm the debt. If they don't allow it - I will try and ride and pay and worst case if they try and repo - I will sell it and pocket the difference.

I looked at a 13 and decided it was 60 months of virtual debtor's prison - with very little room to save for a rainy day. One big bump in 60 months would put me back into a 7.

Also, should I be fortunate enough to make more in the future, then the Trustee would gobble that up.

Anyway - everyone has their reasons...was simply curious...not judgmental.

Best of luck.