Means Test & National Standards for food & clothing

[sheilaE]

Took the means test and came out with a 0 DMI. I've already read that plans can & do get approved with even a neg DMI, so I'm not going to fret and lose sleep worrying about that-my question is on the National Standards. We are a family of 5 and according to the Nat'l Standards, a family of 5 can claim around $1600 for food, clothing, household expenses. Will the trustee say-well YOU can't since you're at 0 DMI or will they allow us to claim it? We can actually get the DMI up to around $300.00, and still be ok, but from what I've read, it's better to start low and work up versus handing over the $300 from the get go and then going up from there.

[momofthree]

Do you have a car payment? You may qualify to just pay your car in the plan and nothing to the unsecureds. That is what we are doing. We pay our car payment + attny fees + trustee fees. We were negative by over $1000/mo on the means test. Well, actually, we weren't subject to the means test since we're under median, but I took it for shits and giggles.

[sheilaE]

Oh my gosh....LOL! Thanks for the laugh momofthree!!! Yes, we do have a car payment, so yeah, I added that in. I'm hoping we can get the payment to be just the car, attny and trustee. We have 2 paid off older cars and the house. We'll finally be filing at the end of the month

[justbroke]

If you are over-the-median, you use the values in the National Standards (period). Don't let your attorney succumb to the Trustee expecting you to "lower" your expenses. Tell them that they are already lowered. LOL! I didn't lower one of my expenses and I used the National Standards, and I'm well over $100K over the median income. Don't play with your expenses when it comes to a Chapter 13. Your expenses need to have a cushion! If you can squeeze $300, then keep that out of your DMI and SAVE $300/month.

[sheilaE]

Wow-thanks-great advice! Makes me kind of wish we were going in tomorrow to file. I'm fired up and ready to do this!

[JEM]

If you are over-the-median, you use the values in the National Standards (period). Don't let your attorney succumb to the Trustee expecting you to "lower" your expenses. Tell them that they are already lowered. LOL! I didn't lower one of my expenses and I used the National Standards, and I'm well over $100K over the median income. Don't play with your expenses when it comes to a Chapter 13. Your expenses need to have a cushion! If you can squeeze $300, then keep that out of your DMI and SAVE $300/month.

I hope I word this correctly (my question that is).

So, if someone was over the median, but wanted to file a Ch7, they get to use the National Standards? Or just if you are going into a Ch13?

Now that the new median income figures are out for Nov., it looks like we will get *just over* (by less than $1000) again. (Ugh)

So, we would get to take the National Standards on everything?

Even mortgage if it's a little over the standard for our area? The attorney said we would take the actual on that.

[justbroke]

So, if someone was over the median, but wanted to file a Ch7, they get to use the National Standards? Or just if you are going into a Ch13?

This has been argued ad naseum across many Districts with, as usual, a majority view and a minority view. Let's just talk about Chapter 7.

For a Chapter 7, the Means Test really means nothing. (That's my personal opinion.) As pointed out in your own post, the Means Test just got "meaner" because of recent adjustments in the median income, making it LOWER in most States. However, the Means Test is just the first or "bright-line" test as to whether you qualify to receive a discharge in a Chapter 7. The Means Test, by itself, does not entitle you to one!

So, it's really up to Schedule J to determine your expenses. Unfortunately, Schedule J is actual expenses, and this is where people get beat up by the United States Trustee (UST). If you're over-the-median, you probably are exceeding the IRS guidelines! I know that I was, since I was more than $100K over the median. (Quality of life issues.) However, the IRS standards seek to, well, standardize the expenses, so that a person such as myself can't claim lavish dining habits (we used to eat out EVERY night at all types of restaurants). This levels the playing field. So a person who is "just" over the median, could benefit from the IRS standards. A person who is well over the median, is punished by them, to an extent.

This is a round-a-bout way of saying that depending on how far you are over the median, the IRS standards may be lower then your actual pre-petition standard of living. This is regardless of whether it's Chapter 7 or Chapter 13. In my case, the IRS standards were lower, so I used the standards. It's hard for the Trustee/UST to argue that I spend too much on food, when I had already reduced it by 50% a month, to meet the IRS standards. For both my Chapter 7 and Chapter 13, I used the actual IRS standards on my Schedule J.

Now that the new median income figures are out for Nov., it looks like we will get *just over* (by less than $1000) again. (Ugh)

Yes, the Means Test just got MEANER!

So, we would get to take the National Standards on everything?

On the Means Test, you have no choice but to take the standards, if you're over the median. On Schedule J, I would use the lesser of your actual or the National Standards.

Even mortgage if it's a little over the standard for our area? The attorney said we would take the actual on that.

Mortgages don't count in the standards. Congress, as part of the BAPCPA amendments of 2005, decided that you got to expense the full amount for secured debt! If it's just a little over, no problem. However, there are varying decisions amongst the Districts as to whether a really expensive McMansion should be allowed. A recent 9th Circuit Court agreed that you can have and claim a McMansion because Congress chose to allow the full amount of the debt payments on the Means Test. However, this may not stop an overzealous UST from pursuing a "bad faith" or "totality of circumstances" objection.

Hope that helps. I dove a little deeper into my thought process and case law.

[JEM]

It helped a lot! Thank you!

[LadyInTheRed]

On Schedule J, I would use the lesser of your actual or the National Standards.

That's the best way to stay under the trustee's radar. But, I exceeded national standards on food and didn't have any problem. An attorney who is familiar with the trustee will know what you can get away with.

[justbroke]

That's the best way to stay under the trustee's radar. But, I exceeded national standards on food and didn't have any problem. An attorney who is familiar with the trustee will know what you can get away with.

Exactly... an attorney who is familiar with the customs and standards in that specific District, who is also willing to fight for you and perhaps establish new caselaw... is always the best!