Bankruptcy Administrator (in NC, otherwise UST) filed a motion for examination 2004

[justforbk]

We are an above median income filer who passed the means test via high childcare costs. Successfully completed 341 with a report of no distribution and a have a nice day. 5 days after the BA filed a motion for examination 2004, requesting 4 different documents (no deposition or appearance, yet.). When i emailed the BA, for a link to upload the documents to (which i supplied), they said they appreciated the promptness and informed me (before they even reviewed anything) they would be filing a POA (presumption of abuse) tomorrow. Should we be concerned, if everything is correct and able to be substantiated via our documents? For example, they asked for documents detailing our childcare expenses.

[justbroke]

Welcome to BKForum. There is some cause for concern because you're over-the-median income and they want to do a deep dive into your expenses. I would say that in 50% of the over-the-median income Chapter 7 cases, where the excessive expenses are not related to a mortgage, the United States Trustee (UST) is interested in your case. While we say to not draw the attention of the UST, this is because you are over-the-median.

The issue is not whether everything is correct on your filed scheduled. The issue is whether the expenses are justifiable under the caselaw for your district. What do I mean by justifiable? Well, let's take a Florida case where the debtor, a man, was supporting his girlfriend and her children. The court, I think it was Williamson (God rest his soul), said that while it was a harsh result, the creditors should not be punished for the debtor's lifestyle choice. By lifestyle choice the judge meant... unmarried. Had they been married, it wouldn't have been an issue.

Bottom line is that the UST is likely to attack your expenses and may say that they are unreasonable. An example may be that you pay $1,500/month in childcare and they may argue that there are less costly childcare options for $1,000/month. That $500/month alone would put you into a Chapter 13, unless you had a severely negative disposable monthly income (DMI) amount.

Substantiation is not enough. Reasonableness will be the question of the day.