Inherent Unfairness of the means test's gross income as relates to chapters 13 and 7

[Leemiller37]

I know this is probably ridiculous, but to me it absolutely sucks that on the means test they look at your gross income. My gross income is approximately $3,500 a month, but I only bring home like $2450 which makes it look like I have over $1000 extra a month to pay for credit cards, etc. After paying my bills and with my NET income it is more like $275 a month.

Is this inherently built in to try to force you into Chapter 13? There is no way I could AFFORD to make those huge payments they would mandate I make. The money is just not there. Who cares what you make gross? Net income is what you bring home. I just think it is unfair. It makes you look like you make more money than you already do. Way more money. And I don't own a home to offset anything.

Any thoughts?

[AngelinaCatHub]

Yes! Thoughts. First the gross income is there because the Court does not know how many deductions you have. Also there are many other things that just like the ridiculous tax forms we have, you must offset the Gross to come down to what you can do in bk. Let’s say you were single and rented. That would be different if you had six kids and two house mortgages. ‘Hub

[JJL]

I know this is probably ridiculous, but to me it absolutely sucks that on the means test they look at your gross income. My gross income is approximately $3,500 a month, but I only bring home like $2450 which makes it look like I have over $1000 extra a month to pay for credit cards, etc. After paying my bills and with my NET income it is more like $275 a month.

Is this inherently built in to try to force you into Chapter 13? There is no way I could AFFORD to make those huge payments they would mandate I make. The money is just not there. Who cares what you make gross? Net income is what you bring home. I just think it is unfair. It makes you look like you make more money than you already do. Way more money. And I don't own a home to offset anything.

Any thoughts?

It was made perfectly clear what I actually took home each month after taxes and what my expenses were. So don't worry about that. I mean they know you have taxes taken out of your pay.

[justbroke]

I'll also add that Gross has to be used because this is a Federal program. People living in different states (and even Cities) pay different or no income taxes. As 'Hub wrote, a family of 6 pays less in taxes, but more to live... than a single person living with his mom.

You don't want to have the law so convoluted addressing 50 States, Puerto Rico, Guam, etc... Remember, there are actually values in the Law and they had to add sections of the law so that the values could change (aka the Section 109(e) debt limits). Imagine trying to do this for 50 States?

In the end, it all washes out. The median income is just a benchmark. It does take into account your specific State. I'm not complaining about that aspect.

Remember the BAPCPA of 2005 was to cut off people who abused the system... and abused it well. They had to put in quantitative (technical) limits on things so that there really was no leeway for the judges and for people to continue to abuse the system.

After all the scare tactics and fear that the BAPCPA of 2005 was going to actually prevent people from filing... I never thought I would be able to, if I needed to.

You have to look beyond the means test, median income, IRS allowances, debt limits, etc... and be glad that we have a manner in which to discharge debts!

[Leemiller37]

Yes! Thoughts. First the gross income is there because the Court does not know how many deductions you have. Also there are many other things that just like the ridiculous tax forms we have, you must offset the Gross to come down to what you can do in bk. Let’s say you were single and rented. That would be different if you had six kids and two house mortgages. ‘Hub

I see your point. It's just that I am that guy who is single and rents. But I also Make about $2550 after taxes and my income has now dropped close to $1,100 a month due to having to move out of my ailing mother's home because she is facing the inevitable soon and I need to be on my own, and also because my part time job has dropped in pay from $600/month net down to $105 last month. So I am left with about $2250 in bills WITHOUT the 1,300 in credit cards and only $2550 in income. Until about 8 months ago I made about $3,600 a month net.

I just talked to a credit counseling agency, Nova Debt, and they were very kind but my payment with them would be $1359 for five years. If I had that I could have continue to pay, but they were very, very kind to me. They recommended I see my attorney again.

But if I go and he says my only option is to file chapter 13 (even though I am below median but now don't think I am because of $6,000 in records I sold on ebay), chapter 13 is not going to be an option either, because it looks like after the gross income consideration it looks like I have around $1,100 left over to pay cards, but I don't with my net.

I feel like one of those people truly between a rock and a hard place, but it is almost becoming sublime. It is like I have no options.......UNLESS that ebay income doesn't count, but I'm sure it does. It is just terrible because if it didn't I am under the median. The only other time I can do this with the way I get paid is this time next year, and by then I will have been sued.......but that may just be the way it has to be..........Very sad right now. I can't do chapter 13. I don't have that amount to be mandated. My $300 I have left over each month just can't service $1,300 a month in credit card debt.