Another Means test question

[BCA2009]

I am over the median, but I pass the means test (by my calculation).

This is due to Mortgage payment of $2,082. Car payments of $488 and $355.

I have $385 of Health Insurance. Taxes $972 (very conservative).

The only other non-IRS standard amount is $42 for life insurance.

My question: does the Trustee/Judge have the ablility to lower any of the IRS values? For instance, one of our cars will be paid off in 18 months. According to the instructions on the means test, we get $489 for each car and 402 for misc transportation costs.

Can they disallow any of the cost becuse the car will be paid off soon. Or can they limit your deduction to the actual amount of the payment ($355).

Based on my reading of the form we get the $489 per car, regardless of the amount we pay. But I just wanted to confirm this.

Thanks,

[pcn]

As I understand it, this is district specific. In ours, we can claim the complete amount on our two paid-off vehicles.

[Meatstick]

Good questions you posted. I would also be interested to find out if a person who is filing a Ch.7 gets to claim those deductions even if they aren't re-affirming their house and vehicle payments ??

[albacore44]

I think its district specific. I was told by the Att in Ca. that you take the balance owed, and devide it by 60 months. then you use that as your monthly payment (but not over $489). That is why the att advised me to buy a car. I had one with a $600 payment with 12 months to go. He said the UST would use that as a basis to push for a Ch-13, what he called a step plan, as soon as the car was paid off that extra $600 would be directed into the Ch-13 plan. He winked and said, wouldent you rather have a car instead of having that $600 going to pay unsecured ?? Made sense to me.

[BCA2009]

I'm sorry if I wasn't clear, but I do want to re-affirm both cars and the house. My question was, whether or not the trustee can modify the means test. For example can he limit the amount allowed for the mortgage (I am re-affirming), or limit the car allowance because your payments are less than the allowed amount or will be paid off in a year or so.

I've seen so many posts about how if you are over the medium income that it is very hard to pass the test. But I am about 20K over the median, but pass easily without using any of the "extra categories", unless the trustee can modify the rules of the test.

I'm just concerned that I'm missing something.

thanks for all of the replies,

[HHM]

You seem fine.

[BCA2009]

I think its district specific. I was told by the Att in Ca. that you take the balance owed, and devide it by 60 months. then you use that as your monthly payment (but not over $489). That is why the att advised me to buy a car. I had one with a $600 payment with 12 months to go. He said the UST would use that as a basis to push for a Ch-13, what he called a step plan, as soon as the car was paid off that extra $600 would be directed into the Ch-13 plan. He winked and said, wouldent you rather have a car instead of having that $600 going to pay unsecured ?? Made sense to me.

That is exactly my question, On one vehicle I owe $355 a month. If I take what I owe on it and divied by 60 months it comes up to $118 a month. But on the means test calculator it still gives me the difference ($489 - $118) $371 as an allowable deduction on top of the $118 value, even though my payment isn't as high as the $489 amount. Am I making sense?

Basically it seems like if you have two car payments you get to take $489 per car. Assuming you re-affirm both.

Is that correct?

Thanks again,

[BCA2009]

You seem fine.

Thanks HHM, you posted while I was typing my reply.

[LimpDisc]

That is exactly my question, On one vehicle I owe $355 a month. If I take what I owe on it and divied by 60 months it comes up to $118 a month. But on the means test calculator it still gives me the difference ($489 - $118) $371 as an allowable deduction on top of the $118 value, even though my payment isn't as high as the $489 amount. Am I making sense?

Basically it seems like if you have two car payments you get to take $489 per car. Assuming you re-affirm both.

Is that correct?

Thanks again,

Yes, you're correct. However, on your schedules you are only allowed the actual payment for expenses.

[albacore44]

That is exactly my question, On one vehicle I owe $355 a month. If I take what I owe on it and divied by 60 months it comes up to $118 a month. But on the means test calculator it still gives me the difference ($489 - $118) $371 as an allowable deduction on top of the $118 value, even though my payment isn't as high as the $489 amount. Am I making sense?

Basically it seems like if you have two car payments you get to take $489 per car. Assuming you re-affirm both.

Is that correct?

Thanks again,

No. It's UP TO $489 per car. The equation works like this (Balance owed/60 months = xxx) . The max you can take is $489 per car, whichever is less. if the UST gets involved, he could ask for your auto loan statement to see the remaining balance, and calculate it himself .

[BCA2009]

No. It's UP TO $489 per car. The equation works like this (Balance owed/60 months = xxx) . The max you can take is $489 per car, whichever is less. if the UST gets involved, he could ask for your auto loan statement to see the remaining balance, and calculate it himself .

OK, Albacore, I do follow what you are saying. Lesser of 489 or Balance owed divided by 60. But that is not what the means test from legalconsumer.com calculates.

On line 42c, I put in my average monthly payment (balane owed/60) = $118.

Then back on line 24 the calculation is made (489 - 118 = 371). So the net result for line 24 is $371. So the $118 portion is included in the section 5C total and the $371 portion is included in the Part 5A portion. Therefore I am getting the benefit of the full $489. It is just broken out into two seperate sections. This is definitely how the online form calculates the amount. which in the end results in giving you 489 per car regardless of what your payment is.

But if that is the case why does the form make you go thru those calculations rather than just giving you $489 per car to begin with.

[albacore44]

I think where you are confused is this. you dont automaticly get $489 per car just because you have a car payment. the UST will calculate you deduction based on 60 months. So lets say you owe $24K. the calculation is ($24K / 60 = $400). so instead of taking the full $489, your entitled to $400.

The way the Att explained it to me was this. if you try to take the full $489 but based on that calculation your entitled to less, the UST will redo your #'s, possibly throwing you into a Ch-13. So for planning purposes, i'm calculating the way the UST does, so I dont get any surprises.

[BCA2009]

I think where you are confused is this. you dont automaticly get $489 per car just because you have a car payment. the UST will calculate you deduction based on 60 months. So lets say you owe $24K. the calculation is ($24K / 60 = $400). so instead of taking the full $489, your entitled to $400.

The way the Att explained it to me was this. if you try to take the full $489 but based on that calculation your entitled to less, the UST will redo your #'s, possibly throwing you into a Ch-13. So for planning purposes, i'm calculating the way the UST does, so I dont get any surprises.

I totally understand what you are saying and it makes sense. That was the reason I started this post. I filled out the calculator and followed it's instructions. I input the amount on line 42 (payoff divided by 60 months). But it still gives me the remaining amount of the IRS allowed expense ($489) back up on line 24. So if you use the calculator at legalconsumer.com, you get the full $489 per car. Assuming you are re-affirming.

I have input the numbers several times and that is the way the form works.

My original question was can the Trustee limit this amount even if it follows the rules of the means test. I know they can challenge you on the extra categories, where you have to justify why you need more allowed expenses. But this appears to be an allowed amount just like the Food/houshold goods or the allowed utilities amount.

If they are allowed to modify it, that's just the way it is. But it doesn't seem fair that the Trustee could modify the basic portions of the means test. (I know, most things in life are not fair).

Anyway, thanks for the responses, I guess in the end it's just up to how they do things in your district.

Thanks again.