Below the median, so why the means test?

[jec]

http://www.usdoj.gov/ust/eo/bapcpa/meanstesting.htm

make sure you pick the right inclusive dates

and your state and region etc.


these are the accepted amounts per irs guidelines

also go and look at a means test as it will tell you what are other acceptable allowances

such as daycare, cell phone etc.

talk to a lawyer and get several opinions

[SinkingFast]

If your total income for the past six months times 2 is below the state median income a "trustee" can force you into a chapter 13 ?

I didn't think you even included your expenses in the filing in this situation.

For "Below the Median Filers" the focus shifts from the Means Test to Schedule I compared to Schedule J. Actual Earned Income vs Actual monthly living Expenses.

If I vs J shows excess disposable income, a below the median filer could be forced into a Ch 13.

So far as we've heard here on the Forum, that hasn't happened.

Attnys and educated Pro Se filers make sure the disposable at the end of I vs J is at or near $0/mo.

[jp2861]

Also, as someone else mentioned, keep track of every nickel you spend. Sch J doesn't list a section for every possible expense for every filer. Some of your expenses will need to be lumped together to fit a certain category or be listed under "other". There was an expense listing floating around somewhere but I can't find the site now. I used that and easily came up with $200 more a month I wouldn't have thought of. A listing like this might be a good sticky topic, if it isn't already here.

[SinkingFast]

Here's a link to an expense calculator:

http://www.ca-bankruptcy-attorneys.c...alculator.html

There's lots of great links in the "Links for Members" thread:

http://www.bkforum.com/showthread.php?t=11356

[ssdsco]

Thanks for the info.

I have my first meeting with my attorney (also a trustee) next week and I'll discuss this with him but any additional feedback would be appreciated.

I think I have a very unusual chapter 7. $200k in consumer debt and $600k in a 401k. I'm retired with $48k annual pension income. That new state median is $52k.

I believe I have allowable expenses that exceed my pension income and the 4 percent annual 401k withdrawals that financial planners recommend so you don‘t run out of money.

I'm trying to head off the trustee deciding I have disposalable income due to the 401k and puts me in a chapter 13.

[PaKettle]

I don't get it. I thought the attorneys pretty much plugged in the expenses based on what is "allowable", not your actual expenses. My attorney didn't even ask for my real expenses on most things, only utilities and rent and car payment.

I am certainly no expert, but I would think you could exaggerate a little on clothes or food or whatever as long as your figures are not over the suggested allowances for your state, and you should be able to qualify that way.

Does the judge or trustee actually look at everyone's bank account to see exactly how much they spend on every little expense? (food, clothes, household, entertainment, etc)
I thought the allowances were set exactly so you didn't have to figure all that out, you could just plug in the allowances pretty much, in a 7? Am I totally wrong? In any case, this is what I've heard of some attorneys doing - they just plug in the expense figures from the chart:

http://www.usdoj.gov/ust/eo/bapcpa/20070201/bci_data/national_expense_standards.htm

Bottom line: I'd think about talking to another attorney or two if it was me.

[jp2861]

I don't get it. I thought the attorneys pretty much plugged in the expenses based on what is "allowable", not your actual expenses. My attorney didn't even ask for my real expenses on most things, only utilities and rent and car payment.

I am certainly no expert, but I would think you could exaggerate a little on clothes or food or whatever as long as your figures are not over the suggested allowances for your state, and you should be able to qualify that way.

Does the judge or trustee actually look at everyone's bank account to see exactly how much they spend on every little expense? (food, clothes, household, entertainment, etc)
I thought the allowances were set exactly so you didn't have to figure all that out, you could just plug in the allowances pretty much, in a 7? Am I totally wrong? In any case, this is what I've heard of some attorneys doing - they just plug in the expense figures from the chart:

http://www.usdoj.gov/ust/eo/bapcpa/20070201/bci_data/national_expense_standards.htm

Bottom line: I'd think about talking to another attorney or two if it was me.

They try to be as accurate as possible to what your actual monthly numbers are. However, they can inflate them a little, based on the allowances to get you as close to zero as possible. There doesn't seem to be any exact accounting happening when listing your expenses. The only time I think someone would need to be concerned is if they're using the max allowable for each category. I'm sure that would raise a few red flags.

I specifically asked my attorney if I needed to keep receipts or account for every nickel each month. I was told NO. Again, I think it goes back to how close one is to the max allowable. If it looks reasonable nobody will question it. Lawyers, if they're on the ball, will know what kind of numbers will fly without being questioned.

[SinkingFast]

Not really, Pa.

We budget WAY more every month than most families for auto insurance because we have teenaged drivers. Many attnys here weren't going to submit it because the $$'s/mo was so high.

Different types of families have different expense levels. You gotta be able to document whatever you say on Schedule J. So yes, the Trustee can look at your bank statements and bills to see if you spend out what you say you do.

You shouldn't have to worry about your 401K monies, SSD. ERISA Qualified Retirement plans are specifically protected under the BK Code. They can't make you cash out your retirement to pay Creditors.

Sounds like your situation is gonna come down to how much comes in and where you spend your money. I vs J.

The Trustee coulda been speaking off the cuff. Once he/she sees your actual income vs expenses, you might be OK. You'll just have to do the Consult to know better what to expect.

[confusedguy]

This is another problem.

I told my lawyer my expenses for eating out, gifts (Christmas, birthday, etc.) and he told me "these are not eligible expenses".

I don't know how you're supposed to account for all of your expenses in the schedule J list.

Who doesn't eat out? Especially if they're single? Are we being financially irresponsible by spending $6.00 at Wendy's instead of spending the same on a meal at home?

The maximums given don't fit the categories on Schedule J. Recreation, clubs and entertainment, for instance. How much is an acceptable amount to spend?

Where's the space on Schedule J for haircuts, postage, bank fees, vehicle registration, etc, etc, etc?

Also, that schedule from California is useful, but are those valid expenses?

This is getting very frustrating. Thanks again for the help.

[SinkingFast]

If you're going out for dinner with the spouse or family as part of an evening out,........... That's Entertainment.

If you're substituting the "$.99 Menu" from Wendys for a cooked meal at home, I would consider that part of your Food expense for the month.

Haircuts, postage, work lunches, school lunches and activities fees, those types of things go on Line 17, "Other". You, if you file Pro Se, or your attny would itemize out the $$ amount on a separate sheet.

Add your OTC drugs, bandages, ointments, creams, etc, into your medical out of pocket.

There are some expenses that just won't be allowed in your Court.

We rent. Renters have home maintenance costs too. Bed and bath linens, light bulbs, window coverings, replace the vacuum cleaner, etc. Renters aren't allowed to take home maintenance deductions here.

Many Trustees do not allow pet expenses. If you have a pet, you've got to pad those expenses into other areas.

Many Courts do not allow tobacco expenses. If you smoke or chew, you'd have to pad those $$$'s into another area of Schedule J.

If you are filing with an attny, you give the attny your expenses list. The attny will know what is and is not allowed. What they can lump in with an "approved" category. If you're filing Pro Se, I'd suggest getting a PACER acct and looking at some cases filed in your Court. Get a feel for the way attnys are completing the Schedules.

[PaKettle]

Thank you all for your replies.

I don't have my numbers here in front of me at the moment, I'll provide them later.

I have schedule J, the list of eligible expenses, but I understand that there are acceptable maximum dollar amouts in relation to this list. Does anyone know where I can find the an itemized list of the maximum allowed for each expense on schedule J. This might be able to give me some guidance as to where I might be shooting to low.

Thank you.

confusedguy, I read over your situation again, and if I were you I would definitely consult with at least 2 more attorneys. It's my impression that the attorney you are seeing just may not be that good. Or in any case, you may get a different viewpoint from another attorney. I would have thought that during the consult they would have been able to truly determine whether you are eligible or not for Ch. 7. If he/she then changed his opinion based on not asking you the right questions about your monthly expenses, that is not a good sign, in my book. Try to get a couple more attorneys to give you free or cheap consultations. This one has virtually ruined your credit with his advice, and now says you may not be eligible??! I would look for someone else.

Try http://www.nacba.org/attorneyfinder/ to find another attorney in your area. Some will give consults by phone so even if they aren't close by but are in your general area, you may want to consult with one. You really don't require many in-person meetings so one that is a little far away is no big deal. You may also try www.totalbankruptcy.com for one. A second and third opinion might shed some more light on your situation.

Meanwhile, I'm not sure which link you were looking at but these are the expense allowances for ALL STATES except Alaska and Hawaii:

http://www.usdoj.gov/ust/eo/bapcpa/20071015/bci_data/national_expense_standards.htm

Meanwhile, see how much you actually are spending. Count up your monthly SET expenses including rent, phone(s), cable, net, gas, electric, car payment, student loans, tax debts, etc. These are all the expenses you will pay even AFTER bankruptcy.

Then add up all your estimated expenses on clothes, food, household items, medical, and so on, and then compare your estimates with the above national standards. What you want to do is see your expenses at the point where you have 0 income left after expenses, or close to 0. If you can do that, honestly, then you can file for Ch. 7 I think. Make sure you list ALL your monthly expenses - don't forget tires for your car averaged out for the year, car insurance, etc. etc. etc. EVERYthing! School costs? Gasoline? Bus? Haircuts? Restaurants while at school or working does count as food expenses!

Try this listing of expenses so you don't forget anything:

http://www.ca-bankruptcy-attorneys.com/calculators/expense_calculator.html

You might also want to try this means test calculator:

http://www.legalconsumer.com/means-test-calculator/index.php

And then there is www.cricketdebt.com which can help you decide whether or not you need credit counseling or bankruptcy, and if you decide to go with bankruptcy for sure, then I'm pretty sure it will serve as your required credit counseling for your state. This one costs $36. There may be some you can find for free or cheaper, that don't count towards bankruptcy counseling requirements.

Based on your relatively low amount of debt I frankly would consider carefully whether or not you need bankruptcy. But since you stopped paying bills on the advice of that attorney 3 months ago, it may serve you to go ahead and do it now. Not sure how well you'll be able to rebuild your credit if you don't file and after missing 3 months of payments...

Good luck.

[confusedguy]

Here are my expenses:

Expense Item Amount Per Period Expense Period Monthly Amount Rent or mobile home space rental: 500.00 Per month 500.00

Electricity: 70.00 Per month 70.00

Natural gas: 90.00 Per month 90.00

Telephone: 35.00 Per month 35.00

Internet: 57.30 Per month 57.30

Home Maintenance: 20.00 Per month 20.00

Food: 258.00 Per month 258.00

Household items (non-food items): 20.00 Per month 20.00

Hygiene supplies (tooth paste, toilet paper, etc.): 15.00 Per month 15.00

Clothing: 50.00 Per month 50.00

Dry cleaning: 10.00 Per month

Laundromat, detergent, softener, etc.: 50.00 Per month 50.00

Average medical and dental expenses: 15.00 Per month 15.00

Prescriptions and "over the counter" medications: 35.00 Per month 35.00
Magazines, periodicals & newspapers: 2.00 Per month 2.00

Recreation & entertainment: 120.00 Per month 120.00

Charitable contributions: 5.00 Per month 5.00

Auto Insurance: 75.00 Per month 75.00

Gasoline: 160.00 Per month 160.00

Tires: 25.00 Per month 25.00

Auto repairs: 50.00 Per month 50.00

Vehicle maintenance: 35.00 Per month 35.00

Tolls: 10.00 Per month 10.00

Parking: 5.00 Per month 5.00

Public transportation: 2.00 Per month 2.00

Vehicle tax & registration: 3.00 Per month 3.00

Vehicle installments: 190.00 Per month 190.00

Cosmetics: 5.00 Per month 5.00

Haircuts: 15.00 Per month 15.00

Bank charges: 6.00 Per month 6.00

Postage: 5.00 Per month 5.00

Total 1938.30

My net monthly income with all appropriate deductions is 2104.12

[keepmine]

What about renters insurance?

[PaKettle]

Here are my expenses:

Expense Item Amount Per Period Expense Period Monthly Amount Rent or mobile home space rental: 500.00 Per month 500.00

Electricity: 70.00 Per month 70.00

Natural gas: 90.00 Per month 90.00

Telephone: 35.00 Per month 35.00

Internet: 57.30 Per month 57.30

Home Maintenance: 20.00 Per month 20.00

Food: 258.00 Per month 258.00

Household items (non-food items): 20.00 Per month 20.00

Hygiene supplies (tooth paste, toilet paper, etc.): 15.00 Per month 15.00

Clothing: 50.00 Per month 50.00

Dry cleaning: 10.00 Per month

Laundromat, detergent, softener, etc.: 50.00 Per month 50.00

Average medical and dental expenses: 15.00 Per month 15.00

Prescriptions and "over the counter" medications: 35.00 Per month 35.00
Magazines, periodicals & newspapers: 2.00 Per month 2.00

Recreation & entertainment: 120.00 Per month 120.00

Charitable contributions: 5.00 Per month 5.00

Auto Insurance: 75.00 Per month 75.00

Gasoline: 160.00 Per month 160.00

Tires: 25.00 Per month 25.00

Auto repairs: 50.00 Per month 50.00

Vehicle maintenance: 35.00 Per month 35.00

Tolls: 10.00 Per month 10.00

Parking: 5.00 Per month 5.00

Public transportation: 2.00 Per month 2.00

Vehicle tax & registration: 3.00 Per month 3.00

Vehicle installments: 190.00 Per month 190.00

Cosmetics: 5.00 Per month 5.00

Haircuts: 15.00 Per month 15.00

Bank charges: 6.00 Per month 6.00

Postage: 5.00 Per month 5.00

Total 1938.30

My net monthly income with all appropriate deductions is 2104.12

You are very close. If I were you I'd definitely take this to a few different attorneys and get their opinions. Sometimes all it takes is a knowledgeable attorney who is willing to legally "Work" the system for you.

[confusedguy]

I went and saw another attorney today. I learned a great deal.

Here is a useful way of looking at the means test.

If you are above Median income, think of it as being presumed guilty until you can prove
yourself innocent.

If you are below the Median income, think of it as being presumed innocent until proven
guilty.

Above the median-the burden of proof is on you to prove that you are not trying to abuse
the system.

Below the median-the burden of proof is on them to prove that you are trying to abuse the
system.

Your remaining expendable income is taken into account whether or not you are above the median income.


What expenses are legitimate to list? The answer to this is that you can put down anything you want,
but you have to be aware that an expense that raises eyebrows is going to be questioned. If you spend $50.00
a month on baseball cards, for example, that might be questioned if your income is close to your expenses.
The term "legitimate expense" is subjective.

If you file for chapter 7 and the trustee questions your expenses, you or the lawyer will receive a document
in the mail listing the expenses that they are questioning. At this point, you are going to need to show
receipts or something documenting what you spend or you are going to have to file for Chapter 13 and pay the
difference between your expenses and your income for 3 years (I believe it is 5 years if you are above median).

My new lawyer says that the "standard deductions" that are on the filing application are really applicable to
those above the median income. Similar to a tax return, you can either take the standard deduction or itemize
these expenses. (I may have misunderstood on this last one; I don't know if that's what he was actually saying.)

The new lawyer says that I have a "50/50" shot of not having my expenses questioned at all. He warns though that I am equally
likely to be shoved into a 13. (We were able to find some additional expenses to those I listed earlier).

I would like to thank all of you folks once again for your prompt replies and for sharing your knowledge. I
may have more questions before I'm done and it's good to know that there's helpful folks out there with some
knowledge of the subject.