Nice size income tax

[freshstart06]

my 06 tax return was around $6000 I had to use this money for back bills, pay up my over draft, my son's birthday, my daughter's birthday and my anniversary and I really don't remember what else. I had no idea I was going to have file bk back then.

Do I have to report the tax refund as an asset??? If so, How do you include this in calculating your income in the means test. I know I am worrying too much but I dont want anything to come up and bite me in the butt.

We are going to use a bankruptcy preparer because we can't afford a lawyer, we have 4 kids and a lot of expenses, I called a few lawyers and the cost is way too much, if I had that kind of money I would not be filing for bk I could use that money for one of my back bills.

[BKTango]

There will be an area, I don't recall where exactly at the moment, on your forms, you will have to list the tax returns for the past 2 or so years and provide copies of those tax forms you filed. You didn't say when you received your tax refund. Either way using it to get caught up on necessary items (bills, health, clothing, food, home repairs, vehicle repairs,etc.) is normal and usually not frowned upon. However, the trustee's and courts absolutely do not see any birthday or anniversary gifts or costs as a necessity. So basically don't go around letting that part be known unless you are asked specifically what it was spent on, usually you are not. Depending on your income, what state you are in, with 4 kids it may not even be an issue anyway. Also it depends heavily on when you received it and when you plan to file.

[freshstart06]

I received it Feb. 3rd, Our net income is well below the median for Arizona. I am a mortgage broker and haven't worked since the end of Feb but received my last commissions in March which was only $3200. My husband average net income after taxes is $5000 a month but his gross is like $6800 a month before taxes. we got behind because I had a detached retina a couple of years back it took three eye surgeries to kind of fix my eye then I broke both of my feet so I can't work for a long while, I even decided to file for disability. When I did the means test we were negative 1100 and this is before the debt expense was included. I am so stressed out.

[freshstart06]

please note, my only income in the last six months is the small commission check for $3200, I owe appraisers, credit reports, lead sources you name it.

[BKTango]

You have many different things going on that can get rather confusing. You received the $6000 tax refund in Feb. You received money from work in the last 6 months (at least $3200), plus you filed for disability, and from your other posts I see you have tribal profit sharing you received a check of $4000 from. Your husband makes $6800 gross a month.


His income alone puts you over the median for Arizona family of 6 by almost $5000. The AZ median for a family of 6 $76,876. You have to compare your gross earnings to the median. Your husband's gross alone is $81,600. That puts you into chapter 13 territory. Then you have your income, profit sharing income, and a tax refund that came your way and the possible disability. You really would need the advice of a qualified attorney to help you sort through all of that especially if you filed a chapter 13.

Doing the means test you still showed a negative of $1100, that's a whole lot of negative to show. Generally when you start having that large of a negative you have to question where your money is going and the lifestyle you live. You should only be including bills that will survive the bk, cars, home, monthly living expenses, etc. Do not include any debts that are going to be discharged. If you still have that large of a negative after that, then you really need to look into a better budget and cheaper ways of living.

To be honest I just don't see how you can slide by in a chapter 7. You have too much income coming in and even though you have a negative, depending on what your actual monthly expenses are a trustee may not let that fly. Some people can make over the median and still file a chapter 7, however you are near $5000 over the median with just your husbands income and then you have more income coming in. Is it possible for you to set up some consultations with a few lawyers in your area, most consults are free and they may be able to help you better understand how everything works.

Please keep in mind, you only need to factor in the expenses you will incur monthly. Only include current debts that you will retain such as a car, or your home, possbile tax debt, student loans. You owing appraisers, credit reports and stuff like that doesn't matter, if you file bk that seems like that you would be discharging that. Unless you are mixing business expenses with personal...in which case then I will say you really do need the advice of an attorney because that's a whole different ballgame.

[freshstart06]

I honestly only factored in the basic living expenses allowed for Arizona and car. You don't understand... even though his gross states one thing when he gets his net it is well under the median. His net check in the last 6 months totals $30,000 expecially for six of his pay checks he was garnished for student loans (paid off now) then you add the $3200 and the $4000 (taxes are taken off of this) Our six month income is $37200 the median for Arizona is $38,438 for 6 month total.
the $37200 is our check after taxes then lets deduct the allowed expense, I used their allowence plus my daughters and my ongoing medical expenses. We don't never have enough money to go over board. Both of our cars are 1997s. things are just hard. I just filed for disability and may change my mind because I feel that after my feet heal I can go back to work. I don't even have a disabilit claim yet. There is not way we can do chapter 13 because there is no money to do it. I was told they don't count the income taxes.

[freshstart06]

by the way, I have not included my debt to appraisers and credit reports, I was just saying that however, I had to use my personal income to support my business.

[BKTango]

I do understand about the gross/net thing. Believe me, everyone's check looks lovely on the gross side and not so great on the net side. I don't think you are understanding....you HAVE to go by gross. That's the law. You can't figure up your last six months income by your net income and be under the median, you have to figure up your last six months income by gross and then compare it to the median. You are $1,238 UNDER the median for 6 months going by net. You can't do this, you have to go by gross.

You have to start with your gross income, and just with your husbands gross income alone you are over the yearly median income by almost $5000 so that would put it at almost $2500 OVER for the six months median. That's your starting point, now take out all allowable expenses plus any extra (be prepared to show proof of these extra expenses), there's an area on your bk forms where you show the deductions taken out of your gross income. Now I didn't even include your income or the tribal profit sharing checks. I understand you have some medical expenses and such, but you have to understand how a trustee and the court look at everything. It's not how you see it, it's how the law reads and how they see it. They will see a family making well over the median with just one income, not including the other money that comes in and your past income.

I'm not saying that by some chance you wouldn't be able to do a chapter 7, especially due to medical expenses. I'm only saying that you need to prepare yourself for the possibility of not having it go that way, because your husband alone makes above the median and you have to understand that.

[freshstart06]

i used the gross income for the means test after the payroll deductions and the standard allowed deductions we were negative. I was told by my "free" lawyer (prepaid legal) that I did it correct. I even did it based on net income without adding payroll deductions and the numbers came out the same. This is the first year my husband made this type of money. He basically worked temp jobs during the time of my detached retina surgeries, they kept firing hime because of all the time he had to take off. I close loans but due to all those surgeries and eye appts. I only made like $22,000 those years. Trust life has been tough for the last 3 1/2 years it isn't like he always made this type of money but all debt has piled up and we can't seem to catch up.

[freshstart06]

Imagine only making maybe close to $40,000 a year gross and maybe $32,000 net (LOL, maybe more) for the past three years on a family of 6. The year you finally land a good job, you get garnished, the tax people come after you and get summons over a past due bill from 1 1/2 ago. In the last six months my husband has been garnished, demanded to pay $15,000 of back taxes, both of my feet break because I fell, I only closed on loan in 6 months and now I can't work. I have to pay my business bills out of my personal account and our net is $1600 less then our gross. We don't own a home or too much of anything. My husbands new job was supposed to finally get us out of debt but instead things are worse.

[BKTango]

My family has lived off of $25-30,000 a year Net. That's take home for the past 10 years. We didn't have that much in credit card debt as some ($30,000), but we had a lot of medical expenses that arose. We didn't have insurance that would cover any of it. Our home is 900 sq. ft and floods when it rains. Everytime. We can't afford to buy another home and move so we just deal with it. Our cars are old beater cars. We all have our hardships, that's why we are all here on a bankruptcy forum. Those of us that have been down the road can do nothing more than offer support and some advise based on our own experience and knowledge of lots of research, reading and more reading.

I am sorry for the rough times your family has gone through and I mean no ill will, I only want you to be prepared for this journey you are about to go on. The last thing you want to do is go into a bankruptcy without knowing everything you need to know especially doing it without an attorney.

You have two threads going and in both you have a multitude of numbers, expenses, incomes, and reasons why. In one post you stated that the student loans are paid off, in another thread you made reference to deductions out of your husbands pay check for student loans. I assume if they are paid off they are no longer being deducted.

What about the owed back taxes? Is that coming out of his paycheck? You mentioned a garnishment. If so that will be included in a chaper 13 plan or you will continue to pay that outside of the bankruptcy but either way you can't deduct it from the check first when looking at the means test (median income chart). (((FYI, under certian circumstances personal income tax debt can be discharged in bankruptcy, you will want a qualified attorney to help you with this matter and help determine if you meet the requirements to having the tax debt dishcarged))).

It doesn't matter that your net (take home pay) is $1600 under your gross, you have to start with the gross. Gross income straight out of the barrel, before anything is deducted from any income, you husband alone makes $6800 a month, that puts you well over the median. Then you have your income and the tribal profits income. (BTW: you might want to find out somehow if the tribal money is exempt or needs to be considered income). I just don't see with normal living expenses plus a little extra for medical with that kind of income (even just your husbands) you can still be negative by over $1000 a month. You must be still including the tax debt or some debt, going by net, or not doing something correct somewhere. Also, were you self-employed as a mortgage broker? You mentioned paying business debt with personal money. That could be an issue that you would need help with.

I know how expenses can be and believe me, when doing the bk form schedules you will want to remember everything expense done to the stamps you buy, but to be that far in the hole monthly with that kind of income, no car payments or such, it will raise a few eyebrows unless you have everything documented well. Personally I really hope you reconsider filing so soon and do alot more research to understand everything more clearly.

[freshstart06]

We do have car payments, the students loans was the garnishment but finally got paid off last paycheck. We just got a tax notice and we will be making arrangements but the back taxes are from 1999,2000.and 2001 you can include that in chapter 7. We have two payments. Everytime I have to go the doctor I have to pay out of pocket for something our insurance only pays 80%. The numbers were mixed up because I was estimating now I have final numbers. Okay take a look

Since the means test is broken down based on monthly

Husband income: 6620
mysef: 344 (broke commission check into 12 months)
Total gross: $6984
Arizona allowed expense which include additional childcare and medcial: $6669
other allowance car payment for 2 cars, on going medical: $776
over due taxes from 1991-2002: $201 monthly
Total deductions: $7900

Subtract gross from allowed deductions: -319

now if you want to add our debts after all of this: $40,000

I will not be working for a whild so I can wait for 2 more months and then we can used my income. If you guys feel that is it best to wait let me know. we did get a summons to answer but that takes a while and we did answer. Please just let me know.

[freshstart06]

By the way, thanks everyone for taking the time to help me, I know you guys are just making sure I don't make any mistakes.

[freshstart06]

by the way, this is the actual numbers I got off my husbands paystubs for the last six months without the garnishments included but it is asked on the means test under the allowed expenses

[lrprn]

Freshstart, are you plugging your numbers into the actual Means Test or are you just comparing your actual income vs your actual expenses? Unfortunately this is a lot more complicated than your income minus your real expenses .

The Means Test forms you must use to file Ch 7 are here - http://www.uscourts.gov/rules/BK_For...m_22A_0407.pdf

When you fill out the official forms, you must use the required IRS figures found here for the National Standards for Living Expenses and the Local Standards at http://www.usdoj.gov/ust/eo/bapcpa/2...anstesting.htm It doesn't matter if your personal and family costs are higher or lower - these are the figures you must use for those lines of the Means Test.

mysef: 344 (broke commission check into 12 months)

On the Means Test, the income look-back is the prior full six calendar months, not 12 months. Let's say you decide to file on July 15, 2007 - then the six-month lookback will be December 1, 2006 to June 30, 2007. If your commission check arrived after Dec 1, you would have to count all of the bonus into your gross income figures. However, if the commission check arrived before Dec 1, then you wouldn't have to count any of it! (This is just an example - your dates will depend on when you plan to file and when your commission check arrived.)

To calculate your actual last-six-month income, add up all the gross income and other money you and your husband made in the last six months and multiply it times 2. That's how you arrive at your annual family income to compare against your state's median income by family size at http://www.usdoj.gov/ust/eo/bapcpa/2...come_table.htm If your income is below the median, then it's 99% likely you can file Ch 7. If your income is above the median, then you'll have to complete the entire Means Test to figure out if you will be forced to file Ch 13 or not. Chances are if you show more than $180/month disposable income on the Means Test, then you will have to file Ch 13.

Please go print out the Ch 7 Means Test from the link above and plug in your figures plus the ones where you must use the IRS figures from the link above. Also it would be really helpful if you can tell us what your family size is and which county you live in in Arizona. We really do want to help you, so please bear with us while we sort out all of your important information. We're glad you're here - hang in there!