Means test and charitable contributions

[Wantmypeace]

I just read online that you can include up to 15% of your gross income as a charitable contribution on your means test. Before we got into a lot of trouble financially, we donated about 1,000/mo (and I can document this for all of 2005, 2006, and 2007). 2008 is when we started struggling and stopped donating. So, does anyone know if we can still include that 15% on the means test or if we have to have been doing it right up until the bk? (which seems crazy) Thoughts?

[Wantmypeace]

the link...

Here's the link to where I read it: http://www.************************/...-it-part-12-2/

[canusaybroke]

We tithe $30 a week to our church and claimed that....cause it is proveable.....as with most things if not all things with the TT don't lie...it's not worth it.....if you did it in 2007 and 2008...it doesnt count except for 6 months prior to filing .....so if you file June 2009 then Decemebr 2008 counts.....July 2009 then January 2009 on up counts......and it is what you donated during that time.......

[optimistic1]

The means test is really an averaging of what you did the last six months in my eyes, and therefore, if you havent donated in the last 6 months, and you have no proof it, then you cant claim the 15% expense. Although, if you were under the 15%, your trustee might not even care if you listed something, you could always try, but you would be cheating the system, and all you could tell the trustee is that you dont have any proof, and he would remove it from the means test calculation to increase your DMI

[Wantmypeace]

I guess my lawyer will have to figure it out. The wording says "continued," but if I was able to pay that 15%, to my church, I would probably have the money to pay my debts now. So, if I don't qualify because of this, I would be wise to stop paying my creditors and give that money to my church for the next 6 months. Then, I would definitely be able to prove it, and I'd pass the means test. Sounds a little bass-ackward to me, but so goes the law, of course! LOL!

[justbroke]

I just read online that you can include up to 15% of your gross income as a charitable contribution on your means test. Before we got into a lot of trouble financially, we donated about 1,000/mo (and I can document this for all of 2005, 2006, and 2007). 2008 is when we started struggling and stopped donating. So, does anyone know if we can still include that 15% on the means test or if we have to have been doing it right up until the bk? (which seems crazy) Thoughts?

By law, yes. But... and here it comes...

First, you need to still be contributing 15% and be able to back it up to the day that you file! (That shows that it's a continued expense.)

Second, many Trustees question these amounts under a totality of circumstances. Let's say you use to earn $7,000 month (of which 15% is roughly $1,050 or just use your $1,000). So, you'd first need to be making $84,000 a year.... now. If your income decreased, and you're still giving $1,000 a month, the Trustee can and will question whether that's "smart" and in good faith.

The "bad faith" objection is where they go with this, but generally, 15% is the top of the chart and it will be looked at (questioned). You do need to provide up to date documentation. I contribute about 5% in total through the year, and there were no questions (and backed up by my tax returns).

So, don't fudge the number. Make sure you can document it. Your 2008 tax return is what they'll be looking at as a yardstick of your "expenses". They will look to your income and other factors to determine if it "smells" right.

[optimistic1]

Sure, as long as you can provide your receipts to the trustee for the last 6 months that show you have been contributing still, then it is justifiable, even if you used that money for faith based purposes rather than a corporate bank. Keep in mind as well that some courts will rule under the "totality of circumstances stipulation", where they might look at your Schedules I and J to determine if you have enough disposable monthly income to contribute to the Chapter 13, and just completely bypass the means test. Your attorney should know if that is the case.

dangit justbroke you type faster than me and got the totality of circumstances in, you got me this time!!!

[LuciluS]

Okay Okay

JustBroke says 12 mths and Optimistic is saying 6 months. I thought my Attorney told me to use that last 12 months for ALL my expenses. Not filing until 9/30/09 (small town, files last day of month) so I thought I would base my utilities, medical expenses, charitable contributions etc on July 2008 - August 2009.

The 6 mths is the look back period for Income right?

I was very Confident until Today, after reading about paying hubby's medical bills (hospitalized for a week in 4/09) being possible preferential payments if I pay them before we file.

Now, I'm ready for an alcoholic drink, but would make me sick as I'm on morphine Grrrr! Cant say I'm going to pull my hair out, cause it does it on its own

Luci

[justbroke]

I'm actually going to go one better. Do not put more than 15% of your "net" monthly income or they will get you. That 15% number was based on Christian tithes of 10% to their churches. Now be careful. The Trustee generally knows it's 10%. However, most people tithe 10% on their after-tax dollars.

So, if you put 15% of your gross income on that line, the Trustee will ask you if you commit 21% (around that) of your "net" income to charities. It can be a trap, if you answer this wrong.

So, be careful what you put down. You really need to make sure it's actual, current, and continuing.

[Rick9972]

Okay Okay

JustBroke says 12 mths and Optimistic is saying 6 months. I thought my Attorney told me to use that last 12 months for ALL my expenses. Not filing until 9/30/09 (small town, files last day of month) so I thought I would base my utilities, medical expenses, charitable contributions etc on July 2008 - August 2009.

The 6 mths is the look back period for Income right?

I was very Confident until Today, after reading about paying hubby's medical bills (hospitalized for a week in 4/09) being possible preferential payments if I pay them before we file.

Now, I'm ready for an alcoholic drink, but would make me sick as I'm on morphine Grrrr! Cant say I'm going to pull my hair out, cause it does it on its own

Luci

*Takes big drink of Brandy* That was for you Luci!!!
*TAkes second big drink of Brandy* That one was for me!

I also have alot of medical bills, and lawyer said that payments are a wonderful thing. No payment over $600.

[Wantmypeace]

Okay, I'm just going to put down the 100/mo that we've been giving for the last year since things got really bad. That's no where near 15 OR 10 percent, and it is provable.

Unfortunately, it may knock us out of ch 7 and into ch 13. UGH. I'm really hoping the lawyer is creative, cause when I use the online means test and follow it, I'm coming up short with only the 100/mo now. It looks like I need to be spending about 500/mo more somewhere that the means test counts...

[LuciluS]

*Takes big drink of Brandy* That was for you Luci!!!
*TAkes second big drink of Brandy* That one was for me!

I also have alot of medical bills, and lawyer said that payments are a wonderful thing. No payment over $600.

ROFLMAO! Thanks Rick! O the Insurance Co. hasn't even sent the EOB on the hospital bill and DH has a $500 deductible and a $2,000 out-of-pocket expense. Trucking industry medical insurance is gawd awful. This is the 3rd trucking company he has worked for.

I'm disabled and have Medicare and a supplemental policy. It pays better than his insurance. But of course, I'm limited to where I can seek medical help.

Oh Well. I just didn't want to have to deal with his 3 Doctors, Ambulance and Hospital.

[pcn]

My schedule J has "average or projected monthly expenses". So if due to paying high cc payments one was not able to contribute as they felt they should, why couldn't the 10% charitable be used. It's the same rationale I see people use in explaining why their food expense/medical expense/etc will be more than it was pre-bk.