Ohhh NOOOO!!!

[jdcat]

Did you find out what the issue is yet coolmom?

[coolmom04]

Yeah.. I talked to the attorney today and they assured us that they are not worried at all. They have NEVER had a ch7 dismissed or converted to a 13. They said the TT would submit reasons as to why they are reviewing it and then we can fight back... so surprisingly they already filed the order to appear for examination. Here's what they want:

1. 6 months of pay stubs prior to filing.. which they already have...
2. 12 months of bank statements - no problem... but does this include credit cards?
3. A copy of life insurance policy and this is a problem b/c as of filing date, my husband had the policy. Two weeks after he filed, the insurance company declined the coverage ... which gives us an extra $42 month.. pushing us over the $109 DMI..
4. "Please provide a detailed accounting of the marital adjustment from the income for the non-filing spouse, in addition to documentation supporting the non-filing spouse's charitable contributions." This confuses me b/c I had no income at the time and I didn't have any charitable contributions. Will they want current income stuff and do they mean my other personal bills?
5. Please provide a detailed accounting of mother-in-law's health insurance payments and expenses paid by the debtor. No problem!

So, the only thing I am worried about is the life insurance policy and wondering what they are really asking for regarding me.

[jdcat]

2. 12 months of bank statements - no problem... but does this include credit cards?

I wouldn't send credit card statements unless they are specifically requested.

3. A copy of life insurance policy and this is a problem b/c as of filing date, my husband had the policy. Two weeks after he filed, the insurance company declined the coverage ... which gives us an extra $42 month.. pushing us over the $109 DMI..

Yeah, that would be a problem. I think though you'll have to let the court know, not much else you can do.

4. "Please provide a detailed accounting of the marital adjustment from the income for the non-filing spouse, in addition to documentation supporting the non-filing spouse's charitable contributions." This confuses me b/c I had no income at the time and I didn't have any charitable contributions. Will they want current income stuff and do they mean my other personal bills?

You'll most likely have to give them current employment income unless they are sticking with what you're income was at the time of filing. You're attorney can tell you which. Maybe the request for info on charitable contributions is a standard request for all 707 (b) situations. Other than that I don't understand why they would want that info if you did not claim any charitable contributions.

Hang in there and let us know how it goes.

[coolmom04]

Thank you! I really appreciate all your info. I'll call the attorney today to find out what we need to do next. It doesn't seem fair that they could ask for info from our current situation when everything is supposed to deal with up to the date of filing.

On a side note... I realized later last night that even though we don't have the $45/month insurance payment, we are paying $40/month more on my mom's health insurance than is listed. I don't know if it's too late to fix that or not, but I'll keep my fingers crossed.

[helpmeout]

Thank you! I really appreciate all your info. I'll call the attorney today to find out what we need to do next. It doesn't seem fair that they could ask for info from our current situation when everything is supposed to deal with up to the date of filing.

On a side note... I realized later last night that even though we don't have the $45/month insurance payment, we are paying $40/month more on my mom's health insurance than is listed. I don't know if it's too late to fix that or not, but I'll keep my fingers crossed.

If you have to fix your schedule to remove the life insurance for your husband, then that is a good time to fix any errors. As long as you can prove the amount, you should be okay.

[SMinGA]

Have you addressed the +$386 DMI with your attorney, based on corrected withholdings? I think that is going to be a problem and your only way out is to convert to a 13.

You said you could add more expenses, but based on IRS guidelines you can't. I looked it up - food/clothing & apparel/personal care/housekeeping/misc for a family of 7 filed after 3/15/10 is $2157.

You are using it all, or close to it, already:

Food $1200
Enter/Recreation $200 (misc)
Cable/internet/cell $195 (misc)
Clothing & Laundry $250
Home maintenance $150 (misc and/or housekeeping supplies)
Personal care & Baby Care (grouped in another category, I don't know how much?)

Without the personal/baby care (which will still fall under personal care I think) you're at $1995, so $162 remaining less your amounts for personal/baby.

You've used up the IRS standards already. I guess you could probably claim the 5% overage on food/apparel for another $80 but will probably need documentation to show why you need the overage. And that really would not help when you have almost $300 DMI you need to use up to get back to a 'safe' DMI for a chapter 7.

If you try increasing things outside of these IRS standards (medical, transportation, etc.) I'm guessing the trustee will fight and/or want documentation of past expenses to back it up since the trustee is already fighting you on the ch. 7.

Did not address the life insurance/medical expense discrepancy because they pretty much cancel each other out and do not play in the IRS guidelines. I think you'd need more actual medical, insurance, etc. type expenses. The sort of things that do not go on IRS standards but your actual expense history. Guessing you don't have those, as you would have turned them in and not submitted a budget with too little expenses on schedule J if you had more of those type bills.

[chriselle]

if your husband filing alone, on your debt payments, make sure you put how much you actually pay and not the minimum. and make sure you play the the marital adjustment real well. also the 100 on medical expenses? is that enough for 7 people? the band aids and topical antibiotics only for 4 active children, 100 might not be enough. You can fight this, your attorney must be attentive and reply in a timely manner to the UST. I've been there, you are 2K above the median, much harder situation. but I think the taxes alone that you mentioned is good enough.

[SMinGA]

The taxes don't help her situation, they hurt it. Previously they were withholding too much, getting a big refund. Adjusting the withholding means more net income now - but the schedule J had the old withholding #s. You're not allowed to have the IRS hold out an extra $300 per month to avoid chapter 7... (Not saying this is what CoolMom did - they tried to fix it.)

but I think the taxes alone that you mentioned is good enough.

Good point - but don't bring it up if you are not actually making those payments every month. We had to provide proof of mortgage payments, student loan payments made after filing to show we were actually making them.

on your debt payments, make sure you put how much you actually pay and not the minimum.

[JEM]

The taxes don't help her situation, they hurt it. Previously they were withholding too much, getting a big refund. Adjusting the withholding means more net income now - but the schedule J had the old withholding #s. You're not allowed to have the IRS hold out an extra $300 per month to avoid chapter 7... (Not saying this is what CoolMom did - they tried to fix it.)

I am still so confused by this. I have asked every attorney I've interviewed about the taxes situation, and whether or not they "add back in" tax refunds here. For instance, if you got a $2400 tax refund, do they add back in $200/mo. to your income, all attorneys said no.

I'm guessing it must be a district specific thing?

[SMinGA]

Somewhat it will depend on the district - but the heart of the matter is that you should have correct withholdings. Otherwise everyone would just have the IRS take an extra $X out monthly, where $X is their DMI, so they could magically file chapter 7 with no DMI available to fund a ch. 13.

It is still possible to get a refund even with correct withholdings - such as if you correct them midyear or have child tax credits/EIC. And then itemized deductions can vary from year to year. If the withholdings are accurate, then I think it depends on the district/trustee as to how refunds are handled.

Attorneys are held accountable for the petitions they file, and so I assume it falls on the attorney to assess withholding levels and make sure it is corrected before filing. I think what happened here is the withholding was fixed, but schedule I/J used old figures and so they did not realize there was more DMI than J showed.

I am still so confused by this. I have asked every attorney I've interviewed about the taxes situation, and whether or not they "add back in" tax refunds here. For instance, if you got a $2400 tax refund, do they add back in $200/mo. to your income, all attorneys said no.

I'm guessing it must be a district specific thing?

[JEM]

Somewhat it will depend on the district - but the heart of the matter is that you should have correct withholdings. Otherwise everyone would just have the IRS take an extra $X out monthly, where $X is their DMI, so they could magically file chapter 7 with no DMI available to fund a ch. 13.

It is still possible to get a refund even with correct withholdings - such as if you correct them midyear or have child tax credits/EIC. And then itemized deductions can vary from year to year. If the withholdings are accurate, then I think it depends on the district/trustee as to how refunds are handled.

Attorneys are held accountable for the petitions they file, and so I assume it falls on the attorney to assess withholding levels and make sure it is corrected before filing. I think what happened here is the withholding was fixed, but schedule I/J used old figures and so they did not realize there was more DMI than J showed.

That makes sense. In our situation, without the child tax credits, we'd be just about even. Might get a small tax refund (few hundred $$). I thought I read somewhere that the child tax credit was exempt in our state too.

So for instance, last year (2009) we paid in about $5000 in Federal taxes. We got back about $3000. We got $2000 for child tax credit and $800 for the making work pay credit. So does that mean that only $200 last year was "over-witholding"?

Sorry, don't mean to hijack...the taxes situation I see in so many threads is so confusing. LOL

[SMinGA]

I am guessing that is a fair assessment JEM. Its not like we can be held accountable to know exactly how we're going to end up at tax time. There are too many variables.

We are under median, have 3 kids. We actually claim exempt on federal and still get a refund due to child tax credits. (Claim married/5 on state and it comes out about even. $10 refund for '08, $72 refund for '09. Before we were able to itemize we had to have extra withheld from state.)

I think child tax credits/EIC should be exempt in all states, but its not. GA has nothing about it so its fair game...

[jdcat]

We are the in the same situation. We get back three grand every year but it's all child tax credit. We have to turn our next tax refund over to the trustee in 2011. I guess trustees here, according to my attorney, take the refund and give you back a prorated amount depending on when you filed. Sucks.

[JEM]

We are the in the same situation. We get back three grand every year but it's all child tax credit. We have to turn our next tax refund over to the trustee in 2011. I guess trustees here, according to my attorney, take the refund and give you back a prorated amount depending on when you filed. Sucks.

They are already talking about NEXT years taxes?? Wow.

I was wondering about this as we may not file until November-ish now.

If you had room, couldn't you just exempt that as "cash"?

[jdcat]

If you had room, couldn't you just exempt that as "cash"?

We can only exempt up to $600 for cash. We did ask our attorney if we can change our withholding so that we get almost nothing back and he said we can do anything we wish as far as our withholding goes. I'd rather change our withholding than hand about a grand over to the trustee.