Question about the means test

[OutOfMyMind]

I've read posts and looked up on the web about the means test. We are filing chapter 7. I question whether we will pass. If we fail it, we go to chapter 13, right? My concern: my husband got a job after our business failed. So far it's a really good job. Been working 1 month now. Salary + commission. How will we know how much disposable income we will have each month? If they look at our last 6 months bank records, we have been liquidating inventory to pay for local, state, and federal taxes, and of course attorneys fees. It will look totally out of wack. We have receipts and paperwork of course.

[LostOne0069]

They don't look at your spending or your bank account to determine your income, they look at your tax records and/or paycheck stubs. If you were self employed, it might be a good idea to be able to prove where the deposits going into your account came from. As long as you can prove that it was from liquidating assets and that you spent those funds on the taxes, attorney fees and other "reasonable" living expenses... you're cool.

For the purpose of the means test, your annual income is calculated by looking at the income that you made in the last 6 months and doubling it... if you're below the median income, then you don't have to take the "means test"... this doesn't mean you will definitely GET a chapter 7, only that it's a lot easier for you. In some places, trustees have still been forcing people who were below the median income into chapter 13 if they had enough "desposable income" to pay $10,000 or 10% (whichever is LESS) of their debt.... there are a lot of people out there (myself included) who feel that a good attorney could get past this.

Good luck!

[lisac77]

OutOfMyMind, have you talked to your lawyer? I was driving myself crazy over the means test (I have an excellent job, and make more than the median) but the lawyer told me that since our business debt exceeded our personal debt by more than 50%, we are not held to the standard of the means test. We can file chapter 7 without accounting for our income or expenses in any way. I would check with your lawyer.

[OutOfMyMind]

No, I haven't asked him about it. In fact he hasn't even brought it up. I found out about it reading threads. But thank you so much for that answer!!! It's hard to reach our atty and this forum is so full of information. We seem to have many of the same problems. My DH ran a business too. We make more than the median too and our expenses are so totally off the charts.

Creditors must be back from Christmas holidays. I had lots of calls. Two men (bless their hearts) were trying to comfort me when I choked up telling them about the filing. I've just tryed to be as nice as I can, explain what's going on and forward the atty's phone number. We are filing on January 15. Filling out paperwork now. I'm sure like yourself, we were never late on bills before this. Oh the stress!!

[lisac77]

No, we've never been late on bills. This is very hard for both of us. We've always been very financially responsible, so much so that we were able to get a business in the first place, which, as you know, requires perfect credit and a substantial down payment. Or in your case, signing over your house, something we did not have to do, thankfully, but the amount of money we're losing would pay off our current mortgage. It's a bitter pill to swallow.

However, on the flip side, I'm not worried about how we'll fare post-BK, as long as we're able to find my husband a job fairly quickly. I think it will all work out in the end.

Sorry about the collection calls . We will probably be filing in February. We will most likely be able to hang on to the business through the end of January (not paying the loans). My husband still hopes that we can sell it, but I have lost all hope of that. I'm just waiting for the axe to fall.

Best of luck to you!