Nolo Inconsistency: Schedule I Question

[Walter]

I am struggling with the language in NOLO tonight concerning Schedule I: Current Income of Individual Debtor(s).

On the form, the first paragraph states:



"The column labeled "Spouse" must be completed in all cases filed by joint debtors and by every married debtor, whether or not a joint petition is filed, unless the spouses are seperated and a joint petition is not filed."




Looking in my NOLO 2009 guide (pp173-174):




"Directly below are a sample of completed Schedule I and line-by-line instructions. If you are married and filing jointly, you must fill in the information for both spouses."




And when discussing Item 16: Combined Average Monthly Income, NOLO states:




"If you are filing jointly, combine your total from item 15 with your spouse's total from Item 15."





So which is?

The debtor (my father) is married and not filing jointly.

I only ask, as I was completing Schedule I and Schedule J and think the final numbers raise a serious flag.

The only income is father's Social Security (which is exempt, yet still shown on Schedule I) and mother's unemployment compensation, which totals ~$2,400/month.

Schedule J reflects monthly expenditures (leaving the credit cards/accounts seeking discharge) of $1,600/month.

This suggest that there is $800/month in disposable income, though his is exempt and hers is not in play....

[MSbklawyer]

I am struggling with the language in NOLO tonight concerning Schedule I: Current Income of Individual Debtor(s).

On the form, the first paragraph states:



"The column labeled "Spouse" must be completed in all cases filed by joint debtors and by every married debtor, whether or not a joint petition is filed, unless the spouses are seperated and a joint petition is not filed."




Looking in my NOLO 2009 guide (pp173-174):




"Directly below are a sample of completed Schedule I and line-by-line instructions. If you are married and filing jointly, you must fill in the information for both spouses."




And when discussing Item 16: Combined Average Monthly Income, NOLO states:




"If you are filing jointly, combine your total from item 15 with your spouse's total from Item 15."





So which is?

The debtor (my father) is married and not filing jointly.

I only ask, as I was completing Schedule I and Schedule J and think the final numbers raise a serious flag.

The only income is father's Social Security (which is exempt, yet still shown on Schedule I) and mother's unemployment compensation, which totals ~$2,400/month.

Schedule J reflects monthly expenditures (leaving the credit cards/accounts seeking discharge) of $1,600/month.

This suggest that there is $800/month in disposable income, though his is exempt and hers is not in play....

There's a lot of ligigation going on about this very point. The means test has a place to back out the non-filing spouse's income. Schedules I/J do not. You're in good company because a lot of lawyers and judges don't know how to interpret it either.

[Walter]

Thanks. Given the 'and' conditional, I can only assume that Schedule I requires non-filing spouses' income, "unless..seperated AND not filing jointly."

"The column labeled "Spouse" must be completed in all cases filed by joint debtors and by every married debtor, whether or not a joint petition is filed, unless the spouses are seperated and a joint petition is not filed."

However, I guess my argument becomes the classification of Social Security and the calculation used to derive DMI; since SS is considered 'exempt,' I would argue that it cannot, at the same time, be disposable.

Including SS on Schedule I and not on Form 22 (Means test) creates a huge swing (precisely equal to the SS benefit) and I am not sure which is using to calculate DMI...

Form 22 would suggest the filer is hundreds in the red, while Schedule I would suggest an $800 DMI...

Perhaps this is why one (free) attorney my parents spoke with suggested no filing at all - said no asset case with 100% exempt income, so don't even bother...but not only want the calls to end, we would like to ensure no legal fees from being sued and a legal end to the financial woes.

Woe is "we."

[alexunlv]

The real issue is whether DMI - Disposable Monthly Income - (assuming the petitioner has met the Means Test - no presumption of abuse-) is a factor in determining whether a Chapter 7 will be converted to a Chapter 13.

Fact Pattern: Person A, who is married to Person B and both are living together, decides to file an individual petition under Chapter 7. Person A crunches the numbers for the Means Test (Form 22A), including Person A and Person B's income, and they meet the Means Test, so no presumption of abuse exist. Then, while completing the Chapter 7 petition, Person A completes Schedules I and J and includes income for both Person A and B while also including expenses for Person A and B. After completing Schedules I and J, there is positive income.

Question: If there is positive income, what is the affect on the filing? Will the Chapter 7 be forced into a Chapter 13?

Side Issue: It appears that "DMI" is a term more applicable when a presumption of abuse arises, as a result of not passing the Means Test. However, there seems to be a lot of confusion as to how relevant DMI is to those cases that have met the Means Test. This is a problem for debtors who have relatively low debt. If the debtors have high debt, then a Chapter 13 would make no sense, however if the debt is relatively low, then maybe the 'DMI' for those who passed the Means Test will play a role and perhaps force one into a Chapter 13.