question about 6 month look back...

[waldo05]

Hello everyone,
I had a questions about the 6th month look back. Is this something that is gospel as far as how they determin your monthly income, or can they take into consideration a recurring bonus/lump sum salary payment? The reason I ask is that I am a teacher and I receive my summer pay in a lump sum in the month of may, and receive no income in June and July. Would I be able to file in December thus having my 6th month look back include those months I did not receive income? I am trying to pass the means test, and don't think that I am going to get close to the required monthly DMI and I am trying to see if there is anything else I can do.

Another question I had was has anyone successfully argued to have their student loan payments be factored into calculating your means test for a Ch7?

What doesn't make sense to me is that you cant use your student loan payments to calculate into if you pass the means test or not for a ch 7, but lets say you have a DMI of 700.00 and don't qualify for a CH 7 and must move to a 13, you are able to use your student loan payments as a priority expense. So if your student loan payment is 800.00 a month, you wouldnt be paying a dime toward the creditors. Please correct me if I am wrong, it might make me feel better.

[SMinGA]

If you file ch. 13, your student loans would be deferred until after the plan is completed. Interest would accrue, but you would not make payments to the student loans. So the payment would not lower your dmi.

Its a good question though about a ch. 7 & student loan payments. I thought so, but your question has made me wonder. Afterall, if a $200 student loan payment takes up the last $200 of your DMI - putting it in deferment for a ch. 13 would allow for a $200 plan payment.

Regarding the 6 month look back, it is to determine 'presumption of abuse' and if you file a ch. 13 whether or not you are eligible for a 36 month plan. Schedule I should be based on your actual monthly income looking forward.

[olivies]

What doesn't make sense to me is that you cant use your student loan payments to calculate into if you pass the means test or not for a ch 7, but lets say you have a DMI of 700.00 and don't qualify for a CH 7 and must move to a 13, you are able to use your student loan payments as a priority expense. So if your student loan payment is 800.00 a month, you wouldnt be paying a dime toward the creditors. Please correct me if I am wrong, it might make me feel better.

I believe that student loans are priority unsecured debt. Meaning, they get in line like every other unsecured creditor. They don't get paid first like secured debts or priority debts (taxes).

[BnkrptcyLwyr]

Hello everyone,
I had a questions about the 6th month look back. Is this something that is gospel as far as how they determin your monthly income, or can they take into consideration a recurring bonus/lump sum salary payment? The reason I ask is that I am a teacher and I receive my summer pay in a lump sum in the month of may, and receive no income in June and July. Would I be able to file in December thus having my 6th month look back include those months I did not receive income? I am trying to pass the means test, and don't think that I am going to get close to the required monthly DMI and I am trying to see if there is anything else I can do.

Yes, you can wait to file and manipulate the means test. I have clients wait all the time so that we can get more favorable numbers.

[waldo05]

so would you suggest a contirbution to a Roth IRA with that bonus money? In the past I have used it landscaping the back yard, tiling the house ect (home improvements not repairs). Another problem is that my wifes car payment of 370.00 is up in 2.5 years, if I wait another 6 months, wont the prorated amount over 5 years be another chunk I am going to have to make up as well? I was told by my lawyer that I am about 800.00 over the means test (that includes my 4400 bonus income as an additional 360.00 a month income). I just received his review of my schedules and have to look to see if there were any mistakes, but I cant see that there is any hope of qualifiing for a 7 if we are that far over the means test. We are about 40k over the 3 person household income in our state. I had to stop paying my 1200.00 in minimum credit card payments (60K in total debt) to continue to pay daycare, mortgage ect.., but my wife has continued to pay her credit card bills (she doesn't want to stop paying until she knows for sure we are going to file). Any suggestions if we wait another 6 months (assuming that we are not sued by my credit cards by then?) to get closer to qualifing without sending up red flags? I am starting to stress about all of this..thanks

[SMinGA]

Being over median does not automatically disqualify you for ch. 7, though it makes it a bit harder and some attorneys are not willing to try. It really boils down to your expenses.

For a ch. 7, having only 2 1/2 years on a car payment remaining would not have a bearing I think. While its true that the car payment will end, at that time you'd have an older car. Either it will cost more to maintain, or you'll replace it with a 'younger' car and take on another car payment.

Daycare expense would lower your DMI - though I hear some trustees argue about dollar amounts. As a parent I know daycare can be costly. If the amount you pay is reasonable (as in, not paying $1000 a week to your mother to watch the kids) based on your area and age of your kids it should not pose a problem in the end. Be prepared to show check stubs, and that the rate is standard for your area/situation.

[BnkrptcyLwyr]

so would you suggest a contirbution to a Roth IRA with that bonus money? In the past I have used it landscaping the back yard, tiling the house ect (home improvements not repairs). Another problem is that my wifes car payment of 370.00 is up in 2.5 years, if I wait another 6 months, wont the prorated amount over 5 years be another chunk I am going to have to make up as well? I was told by my lawyer that I am about 800.00 over the means test (that includes my 4400 bonus income as an additional 360.00 a month income). I just received his review of my schedules and have to look to see if there were any mistakes, but I cant see that there is any hope of qualifiing for a 7 if we are that far over the means test. We are about 40k over the 3 person household income in our state. I had to stop paying my 1200.00 in minimum credit card payments (60K in total debt) to continue to pay daycare, mortgage ect.., but my wife has continued to pay her credit card bills (she doesn't want to stop paying until she knows for sure we are going to file). Any suggestions if we wait another 6 months (assuming that we are not sued by my credit cards by then?) to get closer to qualifing without sending up red flags? I am starting to stress about all of this..thanks

I usually deduct a bonus out as a "special circumstance" ... I would rather wait because it's usually "cleaner" that way ... but I have deducted bonuses as a special circumstance and subtracted it right out. Never had a problem yet. Same thing with excessive overtime, fuel expenses over the national standard, etc. There are a lot of things that can qualify as a "special circumstance" and which other attorneys don't take the time to do.

Don't stress about waiting if necessary ... I had a client who was about to file a 13 but at that time, Chrysler was heading for the dumps. I said, let's wait, because I had a feeling his income would drop. It did, and 8 months later we filed his Chapter 7 ... went right through, no problem ... client couldn't have been happier. And this was a guy who was making 160,000 when he first came in, and his income dropped to 120,000, and I got him into (and out of) a 7.

[daglo]

I usually deduct a bonus out as a "special circumstance" ... I would rather wait because it's usually "cleaner" that way ... but I have deducted bonuses as a special circumstance and subtracted it right out. Never had a problem yet. Same thing with excessive overtime, fuel expenses over the national standard, etc. There are a lot of things that can qualify as a "special circumstance" and which other attorneys don't take the time to do.

Don't stress about waiting if necessary ... I had a client who was about to file a 13 but at that time, Chrysler was heading for the dumps. I said, let's wait, because I had a feeling his income would drop. It did, and 8 months later we filed his Chapter 7 ... went right through, no problem ... client couldn't have been happier. And this was a guy who was making 160,000 when he first came in, and his income dropped to 120,000, and I got him into (and out of) a 7.

We were told we couldn't file a 7 because of our income (100,000) We have no assets and our home is underwater by 250,000. How did you do that?

[SMinGA]

Income is only part of the equation - but some attorneys won't explore your case fully to determine if you have a realistic chance at a ch. 7. It depends on expenses.

If you do have disposable income sufficient to fund a ch. 13, then you won't be able to do a ch. 13. But if your expenses/bills are reasonable and leave you with no DMI, a 7 can be possible. You may need to consult other attorneys - but as mentioned in a few threads now you should also question the current attorney to get a better understanding of the payment projection he gave you.

[SMinGA]

A better question might be: why are you insisting on keeping a home that is so far underwater? Its a hard reality to face, but this is a good time to really look at everything closely.

We were told we couldn't file a 7 because of our income (100,000) We have no assets and our home is underwater by 250,000. How did you do that?