Rephrase my question (caught in middle 7/13)

[bmitchell31]

The means test for Ch 7 does not allow me to include expenses for work related travel such as (lodging, food, entertainment, gas, etc). They are a big expenses, over $2000.00 a month. Is this a special circumstance?

Thanks



"Original Post"

I have business related dept of $138,000 but my consumer debt is $198,000, so not quite 50%. I make more than the median income and I do have a little equity ($15K-$20K). So I have to do the means test, that I'm ok with.

Here's where it gets complicated. I work out of state, therefore I receive a per-diem for travel expenses. Half my salary is overtime I work 50-65 hours a week. I am on a contract basis with no gurantee of extension. My living expenses include my home, land, three cars (one of which I will be letting go back in bankruptcy), and normal and necessary living cost. PLUS I have an apartment, cable/phone, food, gas and others which are travel expenses.

Having done the means test myself, I still show disposable income. How can I reduce my disposable income?

I dont want to file CH 7 on everything, just the business debt. If I am forced into CH 13 I'm afraid that ALL my disposable income will be taken and I will have nothing for unexpected expences, savings (I have none now), or other things I might need or want to buy.

OH!, and $120,000 of my business debt is a balloon note due in three weeks!!

Thanks

[justbroke]

The means test for Ch 7 does not allow me to include expenses for work related travel such as (lodging, food, entertainment, gas, etc). They are a big expenses, over $2000.00 a month. Is this a special circumstance?

Unless you're in the Military and deployed... the short answer is that those are not considered a "special circumstance".

You also mentioned that you're reimbursed through a per diem. If your expenses exceed the per diem, then the Trustee could argue that it's your own issue to address (reduce lodging cost, don't dine out, reduction in entertainment). If your per diem doesn't cover reasonable expenses, you should go back to your contract and try to fix it there.

The per diem aside, don't include the per diem in your "income" unless you are being taxed on it. If you are being taxed on it, then that probably means that you know you'll be traveling to that location for 12 months or more... or that you have actually been there 12 months or more. This certainly makes calculation of your "current monthly income" (CMI) complex.

Things that are probably affecting your means test:

• You are single (you didn't mention a family)
• As many as 20%-50% of your hours are overtime
• You are over the median by a large number
• Your expenses aren't that large (to offset your income)

[bmitchell31]

I have read that "all monies" are counted. My Per-diem is not taxed and I would love to not report it. I'll go with the lawyers advice when that time comes. I do have a family (wife, 2 kids). I work lots of overtime, its part of the contract, I can't reduce my hours.


I have increased my tax deductions and started a 401k, to reduce my "net" income, but I can't change gross income.



thanks for the help

[justbroke]

I don't know what your lawyer will say, but I think of it this way. You made $1,000. Of that $1,000 received, you spent $100 on travel. You then receive a reimbursement of $100 to cover the $100 spent.

So, is your income $1,100 or $1,000? That's the real question. I go by the theory that it's the latter ($1,000).

This is much different than the Tax Refund issue. In a tax Refund Scenario, we would go like this. Say your earned $1,000 gross. You has $100 in taxes withheld. You claim that your net income is $900. The Trustee basis your "disposable income" on your net being really $900.

However, you receive a refund of $50. That means your effective net income is $950, not $900. This is because you overpaid the taxes through payroll deduction and that your net income really should have been $950.

I show this example, just to differentiate the Tax Refund issue from the Reimbursement issue.

[bmitchell31]

FYI

Called Local BK Attorney, South Mississippi where I live.

Question: Does per-diem count as income?
Answer: Yes

He said ALL money from all sources, excluding: SSN, and a couple others that don't apply to me

[justbroke]

FYI

Called Local BK Attorney, South Mississippi where I live.

Question: Does per-diem count as income?
Answer: Yes

He said ALL money from all sources, excluding: SSN, and a couple others that don't apply to me

Interesting.

Probably because you're an independent contractor, and while it's also used to offset an expense, it's treated as income. If you're a 1099 or W-2 employee and they are counting it as income, it's income. I'm thinking because you're an independent contractor, it's income (period). I'm not saying it has to be "taxable" because the Bankruptcy Code doesn't care about whether something is taxable or not. I think your per diem is not a reimbursement. It's a fixed payment based on a formula, "paid" daily.

I would go with what your lawyer thinks anyhow. I'm just thinking out loud for myself.

Now, if you're an independent contractor and its your business, then you don't put these on Line 1 of the Means Test (for wages, salary, etc). You put in on Line 2 where you can deduct costs.

So, if you were Joe Momma d/b/a Joe's Plumbing...

I hope it works out for you though, bmitchell31. I think I got caught up on reimbursement as an employee, and you're talking per diem as a contractor.

[Trixie007]

I don't know if this helps, but... DH is a w-2 employee - he had reimbursement for moving expenses (hotel, meals, gas, misc) from moving, and that was not counted as income in our district. He has also taken a few trips for work since we've been here and was paid a daily per diem, that isn't considered income either. I found all this out after I had read on this forum and elsewhere that those items would count as income! I think this is when it becomes really important that you have a good BK attorney who is familiar with how the local trustees view things!

[justbroke]

I don't know if this helps, but... DH is a w-2 employee - he had reimbursement for moving expenses (hotel, meals, gas, misc) from moving, and that was not counted as income in our district. He has also taken a few trips for work since we've been here and was paid a daily per diem, that isn't considered income either. I found all this out after I had read on this forum and elsewhere that those items would count as income! I think this is when it becomes really important that you have a good BK attorney who is familiar with how the local trustees view things!

I believe it's to the extent that it's "reimbursement" or actual income. Some W-2 employers will gross up your W-2 in order to cover the taxes and protect any money that they give to you that's considered income. Reimbursement of actual travel expenses is not income.

Howerer, the case where someone is an independent contractor, and is receiving a per diem for their expenses, that's not a reimbursement and I think this it is where it gets muddy.

I am a W-2 employee. I get reimbursement. It's not income and is not included on my Means Test.