Question about monthly expenses on means test

[goblue]

I'm going through the paperwork sent by the lawyer (pre-consultation). It asks for our monthly expenses (ie - clothing) to be entered in the means test. How do you calculate this? I honestly have no clue at this point. I did the Nolo means test on line and passed -- but that puts in an automatic national standards number based on my family of 4 (it is listed as 1370 per month). Do they use the smaller amount or the larger amount - -meaning if I guess my clothing expenses to be 300/month - will that amount be listed in the means test - which may effect whether we pass or not. Does that make sense?

Also, we've always gotten large tax returns. Will they take my tax refund that I received this year (March) and add it into my income average for the 6 months? We always managed fine and enjoyed taking family vacations with that tax return. Granted, our credit card debt was high, but definitely manageable. This year, my husband took a 2/3 cut in his income and we ended up living on our credit cards for all expenses so the balances exploded. Now, chase has informed me that they will require a much bigger minimum payment on one account and I'm sure that's just the beginning. I've changed my withholdings to get more back per check going forward, but I assume we'll have another big return next year (thinking 5K). Will they demand all of it be given to the trustee or do they pro rate it based on when it's filed? (Ie - we are hoping to file in September, so would they just take 2/3 of whatever refund we receive next year).

Sorry for all of these questions. I'm in DuPage county in Illinois, if that helps at all.

I appreciate any assistance.

[keezeed]

I have the sames question actually, anyone have wisdom to give?

[optimistic1]

You really need to ask your attorney these questions, I am assuming you are not his first bankruptcy case. Those sound very much like either attorney specific or trustee or district specific rules surrounding your tax refund. And whether or not they determine you have money based on your schedules rather than the means test irs allowances.

Some courts will not give a crap what the means test says, the will instead look at your schedules and determine what amount of money you have leftover. They will do this regardless of whether you are over or under the state median income.

So when putting down your expenses, just try to think back at how much you spent on the categories listed if you dont have receipts.

You see, I have the same problem, I am required to put that down as well, but I never had a budget before, so I am putting down what I think that I can live reasonably on, and to me that is what is fair.


from legalconsumer.com,

Complete Parts 1 and 2 of the calculator to make sure that you've properly computed your income. Although you are not legally required to complete the "expenses" part of the means test form, you may want to anyway to get a sense of how a judge or trustee might view your ability to pay.

Some judges look to your ability to pay as part of the "totality of the circumstances" test (Section 707(b)(3)), and will bar you from Chapter 7 Bankruptcy, regardless of whether your income is above or below the median.

Bottom line: Whatever your income, if the calculator indicates that you have money left over after expenses, study the list of allowed expenses in the means test form and fill in any that apply.

Another thing to worry about: Some judges may rely on different required forms as guides in looking at the "totality of the circumstances" under 707(b)(3): Specifically Form 6, Schedules I and J. These forms also deal with income and expenses but can yield a different "disposable income" result than the means test form (Form 22A) because different things are allowed and excluded on each form. Most notably, the means test income formula (and this calculator) excludes income from social security benefits, while Schedule I does not. Whether your social security income can render you ineligible for Chapter 7 is an unsettled area of law. At least one court has ruled that, by enacting the means test as it did, Congress intended that social security income be excluded when determining chapter 7 eligibility, however, it still must be reported on Schedule I.

If you have significant income from social security benefits, be aware of this issue.

[goblue]

Thanks for the replies. I guess where I get confused - they look at the previous 6 months worth of income, however, in completing schedule I and J, they are looking ahead to what you expect in the future. The past 6+ months is the reason I am filing BK and I'm in that deep dark hole. My husband is a commission only job so it's hard to say for sure what his next future salary will bring.

I'll discuss further with the lawyer- I was just hoping to get an idea of how this all works so I know what questions to ask when I meet with him.

Thanks again!!

[justplaintired]

http://www.irs.gov/businesses/small/article/0,,id=104696,00.html

This site will help you with what is allowable for your state. Hope this will help.