Trustee objection?

[needafreshstart]

I think I'm going to have a problem. I met with my lawyer yesterday and signed all the paperwork to file. When I first met with this lawyer he seemed very knowledgable, more than the others I met during free consultations. I filed as a chapter 7 but several times he has mentioned a chapter 13 isn't bad. Here's the problem, my schedule I and J shows a negative of about $600 dollars. The main reason is they used my last month of income only from a part-time job instead of an annual average. The 6-month income used for the means test is quite higher. I questioned this but he didn't seemed concerned about it. Now I am wondering if he purposely listed it that way to have the trustee object and force it into a chapter 13. If the trustee does object what happens? Thanks.

[freshstart06]

Yes, that is going to caused problems.. Did you ask why he did that??? He has to use all income unless your only job is your part time job. Beware, some attorneys even "good' ones have been known to "force" people into chpt 13.

He has to use your average monthly current income for schedules I and J. Don't get me wrong if your part time job is your average income then you should be okay. but you should have asked him about that.

[nc73]

Maybe he figures the trustee won't catch it..

[freshstart06]

nc73.... funny but you could be right.

[nc73]

Yeah if the lawyer knows the trustee well enough it will be fine..

[needafreshstart]

I work 2 jobs, my full time job has been consistent pay. I cut my hours back the last 2 months at a part-time job to lower the income for the means test. On the the schedule for income though they took my pay directly from my pay checks for the last month. I asked him how they came up with that amount for the income and he said they take it directly off the pay stubs. He said all the expenses I had listed weren't excessive so the negative amount wouldn't be an issue. But he thinks just because I make quite a bit more than the median they will object even though I pass the means test, due to high child support payments. Even if we listed an average income on the schedule I would be negative.

[JollyGG]

Okay was the income he listed for the past six months accurate?

If it was true for the income the six months prior to filing he did the right thing? That is the way the system works.

If the income was not accurate then you probably should talk to the lawyer about it.

[freshstart06]

to me is sounds like he may kill you case. my paralegal increase our income by adding the last paystub after the 6 month average for worse case, she said if you pass with this you will have no problems and we did. Sometimes you can bring more attention to your file if your that much negative but high income filer.

However, in your case you could say you lowered your hours for you part time job because working two jobs was very hard on your and your body. It is hard to work two jobs. I would seek second opinion, go to a few more attorneys and take advantage of the free consult that they offer. Good luck.

[RickInMich]

I'm confused. How can a negative amount throw you into Ch. 13? Is the OP saying their expenses exceed their income by $600? Wouldn't that be all the more reason to do a 7?

[jp2861]

For starters, if you're in the negative you won't be put in a 13. That's just impossible. How can you submit a payment plan if you don't have the money?

As far as your I & J are concerned, that should be your current monthly income. Not the last 6 months. Download the forms and do the calculations yourself, using your CURRENT monthly income and your CURRENT expenses. If after computing your true income and expenses you're still in the hole, then you really need to be thinking about how to balance the numbers. Either increase your income, or get rid of some of the expenses.

If you file with a negative $600 you will get questioned. Ch7 is supposed to give you a fresh start. It's not intended to erase your current debt, and allow you to be back in trouble with the -$600. The trustee will ask you how you expect to stay out of trouble if you're claiming you'll be $600 in the hole the month after you're discharged?

Look at the qualifying aspect as two parts. The first being the median. If you're under the median then you qualify to file. Then go on to part two. Compute your income versus expenses to see which chapter you qualify for. If you're within +$100 you'll be in the Ch7 category. Any more than +$100 and you need to make some adjustments to your expenses. Your income comes off the stubs so you can't make the adjustment there.

[jp2861]

Yeah if the lawyer knows the trustee well enough it will be fine..

Until the US Trustee sees it and asks what the heck is going on. There's more than just the lawyer and the local trustee looking at filings.

[freshstart06]

Again, I question the Lawyer and what he is up to. I just discharge today and we were well over the median. Our paralegal made sure on I and J were not negative. She did not want to add more attention to our file.

Look at from a trustee or US trustee point of view. You work two jobs and you are over the median but you are still negative $600, somthing does not add up. There are people well below the median and positive on the I and J. They will want to look further and find out what is going on. Yes, sometimes over the median fileer can still be looked at abuse if you are negative especially if you are well over and very much in the negative, you are going to have to unload some secure debt.

You may also want to consider, that things are not going to improve if you can't get the budget right.

[lrprn]

Whoa, everyone....slow down.

Current monthly income (CMI) for a Ch 13 filing is calculated the exact same way it is for a Ch 7 - look back the last six full calendar months before filing, add up every source of income including what was earned from both jobs, cash gifts, etc., then divide by six and multiply by 12. That's the income figure that is compared to the filer's state median for his familly size.

Schedule I uses this same income calculation. If Schedule I (income) minus Schedule J (expenses) is -$600, then there is no danger of a Ch 13 filing because there's no disposable income. What matters is how Schedule I compares to Schedule J, even if the filer's income is significantly over the median for his state.

Needafreshstart, from the limited amount of information you've given us, if your lawyer took your one last month of income and took that x 12 rather than using the real calculated income for Schedule 1, then yes, that could be a problem for you. Worst case scenario is that your trustee will object to the plan and your lawyer will have to rework the plan.

If your income on Schedule I minus your expenses on Schedule J ends up more than $180/month, then that's considered enough disposable income to support a Ch 13 plan and your trustee will request you be moved into Ch 13.

You signed your forms stating the information on them was truthful when now you appear to believe it may not be. Go back to your lawyer and ask for an explanation about how the forms were calculated. Don't leave until you are satisfied with the explanation and what the possible outcomes will be if the lawyer indeed did not use the correct figures on your forms.

[jp2861]

lrprn - On Schedule I it specifically says:

"INCOME: (Estimate of average or projected monthly income at time case filed)".

The last 6 months is not going to be the same CMI unless the filer is on a set monthly income. My income over the last 6 months will be different than what my CMI will be "at time case is filed".

If someone robbed their 401k over the last 6 months it will increase their income for the median test. But, their CMI on Sch I, at the time of filing, will be lower. Same would apply to someone whose spouse recently lost a job.

Unless I'm wrong, projected means the future and not what has happened in the last 6 months. Unless, like I said, someone is on a fixed income that won't change. I'm referring to Sch I and not the median test.

[freshstart06]

Yes, on the top of schedule I and J it ask for current income and future debt, it does not ask about the last 6 months. It can be tricky. I still say look for another lawyer or you may get screwed!!!