Presumed abuse letter

[nfreeze]

Justbroke - Thanks for the response. I am under the median by about $4K. Since I filed pro se, the letter came directly to me for the additional paperwork. I sent back everything they requested on 8/26 and had my 341 on 9/8. I would think that had there been an issue, I SHOULD have heard something before the 341 or maybe as you say, AT the 341. The only thing I have that could really be an issue would be my company which is set up as an LLC. I did $22K in business over the past 6 months as I donated a kidney (which they screwed up) in March and my health has not allowed me to focus on it.

A friend of mine said that since they only requested 6 months of paperwork, its probobly nothing serious or the UST would be digging way deeper. I think another forum member ditto'd that in another thread.

Thank you for the response! I appreciate you taking the time.

Regards -

[Bkman2]

Per my attorney they look at the last six month average. Not what you "may" make after you file. I gave the paystubs, P&L's and bank statements for 6 months. I also gave both of our tax paperwork for 2009.

Family of 3 is $5568 for my state

My gross average was $761, wife's was $3738. With added tax refund average hers is $4592 for a total of $5353 gross per month. Still under the limit.

The extra $1000 attorney put as anticipated future income for me was just that, "anticipated". Case was filed end of July. I can show July to Sept paystubs, P&L's and bank statements that the "anticipated" income never took place.

I do agree that if they count the "anticipated" income that never happened then yes I would be over the limit by $785. but I never got that increase.

Now I need to know how to fix this problem.

[justbroke]

Now I need to know how to fix this problem.

Just work with your attorney. Your attorney may need to retract the "anticipated" income. I don't know why the attorney did that anyhow! While Schedule I is "current with a slight lean towards the future"... I have never ever seen someone put "future" anticipated income on line 1!!! There's a comment line specifically for making a mention of things, but MOST people use that to specify anticipated decreases in income.

In any event, your attorney will need to fix your Schedule I, if the tax refund is the problem. Otherwise there are other things to work on. Your attorney will contact the UST. Just stay on top of it.

[Bkman2]

Thanks for you help on this. I'm just tired and want this to end. It has been one problem after another. Only good side is its a no asset case now. I emailed attorney again and if I don't hear back I'll go by on Monday.

[Bkman2]

Just spoke with my attorney. I was told we will have to wait until the US Trustee does something or asks for something. She said that because I converted my case them they will look at everything to make sure I'm not making things up.

My attorney said that a tax refund can be looked at as income but for the means test it is not. As for the $1000 anticipated incease in income, I was told that they can not count that because it is future income and not an average of the last 6 months income.

So I guess I have to wait and see.

[justbroke]

JMy attorney said that a tax refund can be looked at as income but for the means test it is not.

The Means Test is not the problem. It's the Schedule I income.

(Not to get off on a long tangent, but I have been constantly telling people lately, that the Means Test means nothing, really, in the calculation as to whether your case is an abuse. It's only the "first" test (a so-called bright line test). The real test is the Income (Schedule I) less Expenses (Schedule J) determination of your disposable income. This is why I say the means test means nothing. Almost all USTs look to Schedule I and Schedule J for the "truth". If you show positive disposable income on Schedule J, then that's where you get into trouble. I have no quarrels with your lawyers statement that tax refunds don't count on the Means Test. The problem is that your means test is not the problem. )

Best of luck with the UST. Sometimes they withdraw their statement without much fanfare.

[rjmwx81]

T
(Not to get off on a long tangent, but I have been constantly telling people lately, that the Means Test means nothing, really, in the calculation as to whether your case is an abuse. It's only the "first" test (a so-called bright line test). The real test is the Income (Schedule I) less Expenses (Schedule J) determination of your disposable income. This is why I say the means test means nothing. Almost all USTs look to Schedule I and Schedule J for the "truth". If you show positive disposable income on Schedule J, then that's where you get into trouble.

Does that apply even if your schedule I & J prove you're below the median, but would have some positive disposable income?

[tay666]

Does that apply even if your schedule I & J prove you're below the median, but would have some positive disposable income?

Below the median really doesn't mean anything either.
Disposable income is where the problems come in.
You could only be making half the median income, but if you show $100 disposable income between I and J, you are going to have problems.

You can be over the median, and fail the means test, but prove no disposable income and get a CH7.
So the reverse is also true. IF you are under the median, and pass the means test but have disposable income, you can have your case dismissed or be forced into a CH13.

[justbroke]

Does that apply even if your schedule I & J prove you're below the median, but would have some positive disposable income?

The problem is the Means Test itself. Many judges have declared it an arbitrary set of numbers, having no basis in "current' reality, meant as a bright line test to determine if a case is abusive. The real problem is the calculation of "current monthly income" (CMI) and how they use a six month lookback regardless of the source of the money or your "current" situation. As one Judge put it... CMI is neither "Current" nor monthly! That makes the means test... rather "Mean" to the debtor, if you ask me.

(In any event, if you're under the median, sure... you don't need to complete the entire means test... you get a "pass" on it.)

In the end, the real test is whether Schedule I less Schedule J (expenses) yields a number that is greater than either $109.58 or $182.50/month.

So, to really answer your question, yes... Schedule I and J do apply if you're below the median! Even the bankruptcy code states that the court can "(find) that the granting of relief would be an abuse of the provisions of this chapter." The Means Test only determines if there is a presumption of abuse in a case. Nothing more. It is not the "end all".

I don't know why I'm getting so sensitive to the Means Test, but with all the litigation over the Means Test in the past 5 years (since the BAPCPA was enacted), much of how it operates is grounded in solid caselaw. (Mostly around whether secured debts that you're surrendering are allowed on the Means Test. They are! )

[rjmwx81]

Great. There goes my chapter 7 then.

[justbroke]

Great. There goes my chapter 7 then.

If you're over the median income, the means test was never the "test" that you had to pass in order to receive a discharge in a Chapter 7. That's why I don't understand the fascination with passing the means test. Yes, it is required that you pass it (actually, you fail it because you don't have the means to afford a Chapter 13), but it is but one hurdle.

Astute attorney knows this and concentrate on Schedule I and Schedule J. In a Chapter 13 context, however, the Means Test is more important because the disposable monthly income calculated there is used in many Districts as "the" DMI contribution/payment for the plan. However, in a Chapter 7 context, the means test is just the "first" test to see if you could qualify to receive a Chapter 7 discharge.

I just want people to concentrate on their expenses (and income). The means test is what it is... just a quick "test" of your income to determine your initial qualification. I "passed" the means test (having negative disposable income) with a DMI of around $-2,700/month. The reality was, on my Schedule J, that his was "really" only $-200/month or so... and is precisely why Schedule I/J is more important.

Think of the means test like this. It gets you in the door, but it alone doesn't get guarantee you a discharge.

[rjmwx81]

If you're over the median income, the means test was never the "test" that you had to pass in order to receive a discharge in a Chapter 7.

Right, but I'm *not* over the median income. It's kind of an odd situation. My state has a fairly high median and I'm below it by nearly 10,000 a year, but when I do schedule I and J I have a disposable income of almost 300 a month. So even though, at first glance, I pass the "means test", it seems to me that if I file Ch 7 I'm just going to get dismissed or converted to a 13 anyway.

Sorry to the OP for taking over your thread, by the way....

[justbroke]

Right, but I'm *not* over the median income.

Which is why I will keep saying that the means test doesn't really mean anything for "under the median" income filers either. It only allows them to "not" complete the whole thing.

It's kind of an odd situation. My state has a fairly high median and I'm below it by nearly 10,000 a year, but when I do schedule I and J I have a disposable income of almost 300 a month.

If you have positive $300 (or even $185.00) a month in disposable income (on Schedule J) and are under the median, it is highly likely that the UST will move to have your case dismissed or converted.

[tay666]

Right, but I'm *not* over the median income. It's kind of an odd situation. My state has a fairly high median and I'm below it by nearly 10,000 a year, but when I do schedule I and J I have a disposable income of almost 300 a month. So even though, at first glance, I pass the "means test", it seems to me that if I file Ch 7 I'm just going to get dismissed or converted to a 13 anyway.

That $300.
Is that using actually expenses, or what you are allowed to use for expenses.
The reason I ask, is because many people who are struggling with money issues scrimp on things. That makes their expenses low.
But there are certain allowances that you are allowed to use, that would more fairly show true expenses if you had that money to spend, instead of sending it to the CC companies.

[justbroke]

That's why I advocate using an attorney if you're disposable income is "high". You want to make sure that you include EVERY expense category that you are allowed -- based on your District and precedence -- as well as making sure you're not undercutting yourself! Your expenses on Schedule J should be reasonable but they should also be ACTUAL. I say, don't scrimp on Schedule J.