Large medical expenses for means test

[tg16]

If someone was to pay, in the last 12 months, large medical expenses that were out of pocket, such as wheelchairs, wheelchairs ramps, and stairlift, how would that be entered on form 122A-2? Just add all up and divide by 12 and enter on line 22?
What about anticipated expenses the will come up in the future?

Thank you

[justbroke]

I don't think there is anywhere on Form 122A-2 for past medical expenses. What are you trying to do? Estimate what your forward-looking medical expense may be? Since a bunch of the items you listed are durable (not annual expenditures), they would likely not be used in any estimate of Form 122A-2.

Chapter 7s are not interested in anticipated/future expenditures. The simple reason is that they don't apply at the instant that you filed. A Chapter 7 is a snapshot at the time of your filing and everything is evaluated based on the snapshot. Unlike Chapter 13s, a Chapter 7 is not forward looking, so the only thing a Chapter 7 can account for is ongoing "contractual" liabilities that you are not discharging. Additionally Chapter 7s can look a little bit forward to payroll taxes but mostly just to calculate your current monthly income (CMI) to determine eligibility.

At least, that's my read on the nature of the Means Test as it relates to Chapter 7 versus Chapter 13s. Of course there are more nuances, but those are the broad strokes.

[flashoflight]

For my chapter 13 trustee (I know you are trying for a 7), none of your proposed expenses are recurring. That's like spending $12.5k on a HVAC this year and you want to divide that number by 12? The trustee would argue that the appropriate number is actually zero since it won't break within the five years of a hypothetical 13. Medical you need virtually certain recurring expenses like maintenance medications and treatments for chronic conditions. The lawyer can haggle to have borderline expenses accepted like root canals and surgeries if there has been a history of them. This is where your good lawyer comes in since he will hopefully know most of the ch7 trustees and know what expenses will get through your randomly chosen trustee.

[tg16]

I understand. Suppose the medical condition is severe, and the only outcome is fatal, whether it is next month or 3 years from now. Under this scenario, medical equipment WILL be necessary for the remainder of the life.

[justbroke]

If a person is stage 3/4 I would say that they should be un-collectable at best. A bankruptcy wouldn't solve any problems. Example, a person with stage-4 renal cancer would likely be on SSI and protected. Unless there is other property to protect, I don't see filing bankruptcy -- a Chapter 7 -- with mounting medical debt. Personally, I find it unfathomable to expect someone who is "stage 4" and who is otherwise indigent (or insolvent) to be hounded by creditors and expected to pay bills. I'm sure that it happens since debt obligations are debt obligations, but it seems surreal.

Now, back to reality. I hope that you're not that sick, but some sort of medical planning may be necessary. This doesn't mean that a probate estate or a bankruptcy estate won't be able to get to assets. Asset planning through an estate planning or asset management expert is likely the course.

In this scenario what is the debtor attempting to do? Save a home? Protect other property? Ensure that debts aren't passed onto the probate estate? Protect relatives? Even with a Chapter 7 bankruptcy, that would solve the issues that existed on the day of filing, will not solve any future debt issues (for 8 years).

Even if there were future potential medical issues, up to and including death, the most that such a debtor would hear from a Chapter 7 Trustee is that they are sorry about your medical condition. The Trustee would then proceed to systematically liquidate the bankruptcy estate. (Maybe the Trustee would counsel the debtor and the debtor's attorney to consider alternate estate planning actions, but the sick debtor may actually need bankruptcy.)

Those are my thoughts.

[bigdog6464]

The comments here are correct. The means Test, as stupid as this sounds, looks backward for income and forward for expenses. Doesn't matter what your expenses have been. The only expenses that can be projected forward would be secured loans in which you are keeping the property and reaffirming the debt.

[tg16]

Thanks for all your input.. But, as I read a just received copy of NOLO, "How to file for chapter 7", page 293 addresses line 26, "Continuing contributions to the care of household or family members."

"Anything you spend to care for a member of your household or immediate family because of the member's age, illness, or disability can be deducted here. If your contributions are episodic - a wheel chair here, a vacation with a companion there - estimate your average monthly expenses and enter it here."

Now I'm confused, ANYTHING YOU SPEND.....
What about a $4000 stairlift needed for a disabled person of the household?
How could this section be forward looking?

[justbroke]

That question -- #26 -- relates to ongoing expense that is regular (paid in the past consistently) and well-documented. For example, I could deduct the money I spent, monthly and documented, for a car for my elderly parent. If you put anything on line 26, it will be questioned.

Don't just read NOLO's information about it, look at the question on the actual form;

Form 122A-2 Line 26. The actual monthly expenses that you will continue to pay for the reasonable and necessary care and support of an elderly, chronically ill, or disabled member of your household or member of your immediate family who is unable to pay for such expenses. These expenses may include contributions to an account of a qualified ABLE program."

Notice that it reads "actual" and it's for a member of the household (not the debtor). This looks at something that is continuing (ongoing), such as paying the rent for an elderly parent or paying some other expenses for them.

Please realize that there are a lot of nuances, but the NOLO information is not necessarily helpful in listing "anything" that you spend will be allowed.

So although NOLO writes "anything you spend" it's more like "those costs... which you continue to pay... that are reasonable... and for the necessary care/support... or your immediate family..." and further qualifies that with that they are unable to pay for those expenses. Expect the Trustee to scrutinize anything higher than $0.00 on line #26.

Edited to add: I looked deeper into this because the Executive Office of the United States Trustee (EOUST) publishes a guide for Trustees. Specifically there is one for Chapter 7 Trustees that tells them the EOUST's position on every single line on the Means Test. (The EOUST guides Trustees to object to anything on line #26 and then have the debtor provide thorough documentation to overcome the objection.)

Line 26, Continued contributions to the care of household or family members.

• Includes only actual, not anticipated expenses.
• Family member must live with the debtor or be a member of the debtor’s immediate family, i.e., parent, grandparent, sibling, child, grandchild.
• Elderly, chronically ill, or disabled person must be unable to pay the expense.

As I suspected, they are not looking at "anticipated" expenses. They are very specific about the conditions of the expense including inability for the dependent to pay. If you are going to file a Chapter 7 Pro Se, I highly recommend reading the guidebook that the Chapter 7 Trustees use, as well as the EOUST's opinion on the lines in the Means Test (for which I include the link below).

https://www.justice.gov/ust-regions-r08/file/means_test_issues_nash.pdf/download

[tg16]

Thanks again for your insight and a fantastic website. Realized now, that some things, for some people, are left best to professionals.
TG

[justbroke]

Thanks again for your insight and a fantastic website. Realized now, that some things, for some people, are left best to professionals.

"That's why they make the big bucks!" Or so I have been told.

[tg16]

Funny, I heard the same...