Presumption of Abuse Question

[jlewtoo]

Hello,
My husband and I recently filed for Chapter 7 bankruptcy in October and now we have received a presumption of absue notice from the US Trustee. This was sent after we had our 341 meeting. Our son was diagnosed with autism when we were living in Orange County, CA two years ago and after that time our financial world came crashing down. We could no longer afford our house payment, and it eventually went into foreclosure because we could not sell it for what we owed (offered a short sale which the bank declined). My husband and I made good money before my son's diagnosis, but after we had to pay a fortune in treatment and private care until we ran out of cash. I had to quit my job because I could no longer afford to pay for a nanny.

We moved to Arizona where it is cheaper and filed for bankruptcy. We are still showing above means because my husband makes decent money (but not enough to pay our high credit card bills and old mortgage payment). My son's treatments are very expensive and he is also on a special diet. My lawyer says that we can dispute the presumption of abuse with my son's diagnosis, etc. but I need to know how realistic this is. We are thinking of returning to CA because the services for autistic children is horrible in AZ, but I know we can't afford to live there without our debt being dismissed. Can anyone shed some light on this for me? We have been through enough the last few years and I don't want anymore surprises. How long will it take before we know whether our appeal is approved or denied? If it is denied, what happens next? Do we have to reapply for a 13?

Thanks in advance,
Jess

[Minnymouth]

You did not say whether you used an attorney or not?? He should have some answers for you regarding this issue of abuse (what the trustee is basing it on)......

You can appeal the abuse motion and have a hearing with the judge to discuss it all.

You say you now live in Az...... is your bankruptcy filed there? Is it based on Az regulations or Ca?

Your attorney is your lifeline - let him earn his money......

It's possible that you might be forced into a Chapter 13 if the income warrants it....

Keep us posted....

[jlewtoo]

Hello,
We filed in AZ after living here for 90 days. We do have an attorney and he stated that at this point we should appeal the decision and explain our son's situation caused our financial problems. I would like to appeal in person if possible, I will follow up with our attorney on that. I am just concerned that the appeals are usually denied and want to know how likely it is they will allow our 7 to continue, how long the decision takes, etc.

Any help you can provide is appreciated! Thanks.

Jess

[jktrading]

Was it that you charged luxuries within 90 days of filing, or cash advance within 70 days? Aren't those the only 2 reasons behind this type of complaint?

[FreshLikeADaisy]

Jktrading, as far as I know those are not the ONLY two reasons, just the two most common ones. Wouldn't it be great if they *were* the only two reasons?

[jlewtoo]

We did not receive a reason in the letter. Just that there is a presumption of abuse. I am hoping that by explaining why we are filing it will help our case. We did not have the opportunity to explain our son's situation prior to the appeal as medical conditions are not taken into account when filing. Our lawyer was concerned that we might be right on the line with our income, but felt it was worth pursuing. I hope he was right.

[aachudneymiles]

Mite Be 13...

[lrprn]

A presumption of abuse just means that the US trustee thinks you may not actually qualify to file Chapter 7 in the absence of evidence proving otherwise.

My guess is that the trustee wants you to prove the medical expenses because they are likely far above the norm. Also you mentioned that your income was close to the state median. Combined those were likely enough for the US trustee to want you to prove your income figures and medical expenses are legitimate.

Hopefully you kept receipts and bills for your son's medical treatments and therapies. Also having a letter from his doctors stating the medical treatments are necessary will help as well. Together these can be the proof needed that your son's medical expenses are legitimate and will be ongoing for a long time.

If the US trustee can prove that you and your husband have at least $160/month in disposable income on the Means Test and Schedules, it's possible to push you into Ch 13. Just depends on what you can prove to the satisfaction of the US trustee.

Typically the hearing is done in person at the courthouse, so you should get the chance to tell your story. However, please keep in mind that the hearing will be factual and won't be based on sympathy for your son's diagnosis or your hard times because of it. Just wanted you to be aware so you won't be caught off guard. Bankruptcy is an emotionless business decision to the courts.