Can a large payroll deduction get someone under the median?

[topekajack]

Ok, a hypothetical situation:

Joe is under the gross monthly median by $700. He qualifies for a chapter 7. His payroll deduction are typical for his income and there are no deductions for 401k, insurance or HSA (or anything else other than federal payroll taxes for that matter). Joe's company doesn't offer health insurance. He pays insurance out-of-pocket at $1,000/mo. for his family.

John is over the gross monthly median income by $700. He thinks he may have to file a chapter 13. However, there is a large payroll deduction every month of $800 for insurance. But, his gross income is still over the median.

Can John claim he is under the median? If not, is this a bankruptcy error? Why would John be denied for an automatic 7 if he so chooses simply because he is paying for his insurance in a different manner than Joe?

Thanks all.... I was looking at my payroll deductions and I noticed that if my employer offered insurance I might be in John's situation??

[JRScott]

You can't claim you are under median as you have to use gross wages not net.

No it is not an error.

Being over median does not automatically disqualify you, you have to fill out the rest of the means test. Medical Insurance is an allowed expense.

[frogger]

Reminds me of that song "Games People Play". It also reminds me of a bird that can't fly or a dog that won't hunt.

[justbroke]

As JRScott adequately stated, the over/under calculation is based on gross wages. You either qualify for a discharge under Chapter 7 or you don't. Anyone attempting to game the system should feel the full force and fury of not only the United States Bankruptcy Court, but in a criminal proceeding in the United States District Court. Just my opinion.

It also reminds me of a bird that can't fly or a dog that won't hunt.

Or, a frog that's too liquored up to hop... LOL.

[frogger]

Or, a frog that's too liquored up to hop... LOL.

Not yet, but soon my friend. Very soon.

[AngelinaCatHub]

As JRScott adequately stated, the over/under calculation is based on gross wages. You either qualify for a discharge under Chapter 7 or you don't. Anyone attempting to game the system should feel the full force and fury of not only the United States Bankruptcy Court, but in a criminal proceeding in the United States District Court. Just my opinion.

Or, a frog that's too liquored up to hop... LOL.

LOL on both of you. Now be easy on Frogger, he promised to put his old Avatar back.

Have a great Christmas folks. 'Hub and Mrs.