Different Lawyers Advice - What Would You Do in My Shoes?

[gman]

I have met with 6 lawyers in the last few days and its almost like each one has a different opinion on certain facets of my case.

At day's end - I am trying to decide WHEN to file and WHAT to include on my MEANS TEST. Understand that I am currently unemployed, so "passing" the second hurdle of Schedule J is not an issue for me. We can leave that area of my case alone.

All things being equal, I would prefer to file in October and not November for a slew of reasons.

Background and Issues:

* I will be an over the median filer even though I am unemployed. I was laid off in early July and the only income since then have been unemployment benefits. This will be the case until December 1 when I slip below the state median income.

* My disposable income on the Means Test is somewhere between +280 and -270 on October 1. Why? Well I have an average of $550 of unemployment income on the Means Test. I've had some lawyers tell me it must be included while others say it can be exempted. Not a single lawyer has been able to provide a specific case to back their opinion.

* When Nov 1 rolls around, my disposable income will be between -800 and -1350, so I will easily "pass" the Means Test on Nov 1.

* Going back to an potential October filing, I could "pass the Means Test" by including some expenses that I left off the numbers above because I was being ultra-conservative. If I can come up with about $125 of expenses, I would be have a disposable income of under $167 and since I have $200k+ of unsecured debt - I would pass. Ideas for other monthly expenses include - but are not limited to:

-- $35 more [above the IRS standard] for food/apparel - as I do have the receipts
-- $80 for cell phone - as this is my only phone
-- $80 for 10 year old son cell phone -- as I am a single dad and have custody
-- $50 for taxes on unemployment income -- as I did not withhold the correct amount and these would be the actual taxes due
-- $8 for daycare -- as this is an actual expense -- it is low because I am unemployed currently
-- $350 for rent -- as my actual rent is over the IRS limit but I am required to live where I do because of a custody agreement

* I have no assets -- everything is exempt. I've had all lawyers tell me this.

* I've had some lawyers tell me that even if I pass the Means Test and Schedule J - the UST may claim I can get a job making $100k+ like I have in the past and will look to deny my Chapter 7 claim. When I ask if this has happened to a client of theirs, I did not get any instance of this happening. I also hears that the UST can opt to "sit on my case" for months or years waiting for me to get a job. I am unsure if this was a lawyer scare tactic to get me prepared for a 13 [where I know they make more money] or not.

* I've had other lawyers tell me they have had cases where debtors made $300k+ [that would be nice!!!] and lose their job --- collect unemployment --- and sail right through the process with no objections.

* I will need to crack IRAs to pay rent and eat in October. [Yes - I know there are tax implications and the money moves from exempt to non-exempt - so please do not comment on that problem.] I've had some lawyers tell me this is income on the Means Test while others say when it is used for necessities - it is excluded.

* One lawyer told me that I am going to have problems even in December when I am under the median! He said since I made $100k before a UST will say I could get a new job any day, would likely file a motion to dismiss, sit on my case, and wait for me to get a job.

As you can see - the "legal advice" I am getting from the legal community is all over the board.

Assume for now that I am going to file on October 1.

Please respond and either:

(a) give me ideas on what you would do on the Means Test for income and expenses given some of the options I have listed above or

(b) steer me into a November filing with really sound reasons why October may be suicidal for me.

I realize neither option is perfect and both have inherent risks....just looking for the answer to the question: WHAT WOULD YOU DO IN MY SHOES?

Thanks to all who chime in...

[tobee43]

6 atty's opinions...you know what they say about opinions...

well, it clearly appears to me that you have done your homework. but it gets to the point that you now need to sit down...try and relax and just look at the facts as they are.


first....depending on your district...some unemployment benefits are exempt under the ss act....in other districts it is in fact included with your means test. ( in ours it WAS NOT). so, depending on where you file, is where you will find your answer to that question clearly. in the state i filed it even varied from county to county....that is why they may not have given you a "clear" answer on that MOST important question.

secondly, the criteria does not necessary have to be that you meet the means test, if your expenses are real and proving correct.

as far as when to file...you need to think how and when it benefits you, the way YOU feel most comfortable.

while we completely were paid in full with our atty, i had him hold up for a few months for various reasons. which had to do solely with MY personal comfort level....not that there is anything comforting about the entire situation.

now...in as much as if by aunt had b**ls she'd be my uncle...would also be as likely as you are to find a job, and i'm not really caring which field you're in at the time of the economic crisis, one cannot predict or expect anyone can find work....actually, when the trustee asked what i did and i responded and then said how i was actively seeking employment...she replied..."no way are you going to find a job, not in your line of work"....so really how can an atty tell you that a trustee could or would expect anyone to find work when none is to be had. bizarre.

secondly, our expenses were not scrutinized under a microscope because although, they were "considered" above the means....they were in fact provable and factural.....and not unreasonable. (example...r electric bill has doubled since we moved here..the company got a raise). what can anyone say when you can prove your expenses...when you tell the truth, you need not worry because the truth simple does not change.

i waited, so i understand your concerns, but i would wait until novemeber...while it may be nerve racking for you, it may be in fact, for your best interest. just keep to the this site when you get really stressed out....most of us have been there and done that!! so, you know you are NOT alone and can make it thru this.

[ccsjoe]

Hi gman,

Assuming an October filing date AND comparing to what our attorney included in our means test, I would certainly include all the expenses you list there and be prepared to back them up (as you have said you would), including producing the custody agreement that confines you to the higher rent area. I would question the daycare, you are unemployed so I presume you are providing the daycare yourself, in my opinion that should not be considered a childcare expense. If my presumption is wrong, and it is an actual expense, I would question the amount, as it seems ridiculously low and unlikely to be a material difference ($8/month??). I also think $80/month for your son's cell phone is going to be deemed excessive and called into question. We are a family of 3 and have a family plan with full data and text capabilities and no overages for $110/month, 2 lines...so $55 each.

I would include unemployment as income on your means test. Even if some say it can be excluded, if you can pass means with it included, you'll be absolutely safe.

I don't buy the "you had a 100K job previously and mayget same in future" crap of an argument that you were fed. If that were the case, MANY of us would be screwed. And yes, I said us.

I do however think you will initially be flagged by the UST for presumption of abuse, although totality of circumstances will likely dismiss the presumption.

What would I do? Likely, I would wait until November so I would not have to 1. defend the stickier points you posted above, that may fall upon subjective rather than objective opinion and interpretation of a trustee or UST; and 2. hope to not draw as much attention to my case from the uST in hopes of avoiding a potential filing of presumption and/or audit. I'd take the IRA penalty but pull only and exclusively what was needed for necessities...and bare bones at that.

Just my devalued one and a half cents of an opinion.

[tobee43]

lol....joe...of course Op should wait until nov...

and also just my devalued 1/2 of a cent worth on the take of it! but never an opinion!

[gman]

Failed to mention....

I could quit taking UI immediately and if I did this - my income would drop on Oct 1 by around $100/mo [over the past 6 months.]

This would get me under the magical $167 mark of disposable income without adding a single expense.

Would anyone advise this? Pros? Cons?

[helpmeout]

In all likelihood, the unemployment income will be used on both the means test and Schedule I. When I filed, the child support I receive (like UI, this is exempt from garnishment from creditors) had to be used in both places. As for the UST saying that you could get a job making what you made, it is my understanding that BK court does not impute income to a person. Now, if you get a job between filing and the 341, the UST may try to use the Totality of Circumstances to make a decision as to whether to file a presumption of abuse or not.

If waiting longer will help lower the income on the means test, then that is probably the route that I would go. Less of a headache that way unless you need to do an emergency filing.

I would also take a closer look at your expenses. Do you have insurance? Where are the medical expenses? You can put the IRS standard down for that. The childcare will probably get by since it really isn't a lot, but if you have a stickler for a Trustee, you need to be able to show that it is for job seeking. Also, entertainment (I'm not talking about a lot here, but a reasonable amount will probably get by) can be included.

If you stop receiving UI, how will you feed yourself and your kid? I would check into how long it would take to get it restarted as it could take weeks.

[tobee43]

Failed to mention....

I could quit taking UI immediately and if I did this - my income would drop on Oct 1 by around $100/mo [over the past 6 months.]

This would get me under the magical $167 mark of disposable income without adding a single expense.

Would anyone advise this? Pros? Cons?

gman...first nice to see you! remember.....

UI changes not only in every state but in every district of a state...so check first to see if it applicable to you to have to count it. in our district we DID NOT! it fell under the protection of the ss act. however, it is NOT the case in all districts, so that would be the first thing i would check out.

[gman]

gman...first nice to see you! remember.....

UI changes not only in every state but in every district of a state...so check first to see if it applicable to you to have to count it. in our district we DID NOT! it fell under the protection of the ss act. however, it is NOT the case in all districts, so that would be the first thing i would check out.

Seeing it can be counted or not be counted district by district is my problem....as I cannot for the life of me get a lawyer to back up their "opinion" with any evidence. Half say it is counted in my district - while the other half do not.

I just wish there was someone I could call who would tell me the facts for my district and not their "opinion" if you know what I mean....

Any ideas out there?

[tobee43]

i will be most happy if you want to pm your district and see if i can do any further research for you. (i really don't usally offer this)...but gman, sometimes one just has to be an exception to the rule.

i know you are SUCH a perfectionist ( a nicer was to discribe us OCD persons)...and you need to see it in writing. i totally agree and can try and give it some of my time researching it for you. i don't know how successful i'd be, since i know how resourceful you are...but i will give a crack at it if you want.

[Pandora]

Seeing it can be counted or not be counted district by district is my problem....as I cannot for the life of me get a lawyer to back up their "opinion" with any evidence. Half say it is counted in my district - while the other half do not.

I just wish there was someone I could call who would tell me the facts for my district and not their "opinion" if you know what I mean....

Any ideas out there?

From the Means Test - INCOME #9:

9 Unemployment compensation.

Unemployment compensation. Enter the amount in Column A and, if applicable, Column B.


However, if you contend that unemployment compensation received by you or your spouse was a benefit under the Social Security Act, do not list the amount of such compensation in Column A or B, but instead state the amount in the space below:


What's this? (From Congressional Committee Report): "Unemployment compensation is given special treatment. Because the federal government provides funding for state unemployment compensation under the Social Security Act, there may be a dispute about whether unemployment compensation is a "benefit received under the Social Security Act." The forms take no position on the merits of this argument, but give debtors the option of reporting unemployment compensation separately from the CMI calculation. This separate reporting allows parties in interest to determine the materiality of an exclusion of unemployment compensation and to challenge it. " In plain English this means, report it separately. It may not affect the result of the test. If it does, it will be a "material" issue that the debtor may want to assert.)


Also - see this for Georgia: http://www.legalconsumer.com/bankrup...llName=Georgia

[tobee43]

What's this? (From Congressional Committee Report): "Unemployment compensation is given special treatment. Because the federal government provides funding for state unemployment compensation under the Social Security Act, there may be a dispute about whether unemployment compensation is a "benefit received under the Social Security Act." The forms take no position on the merits of this argument, but give debtors the option of reporting unemployment compensation separately from the CMI calculation. This separate reporting allows parties in interest to determine the materiality of an exclusion of unemployment compensation and to challenge it. " In plain English this means, report it separately. It may not affect the result of the test. If it does, it will be a "material" issue that the debtor may want to assert.)

now this is FEDERAL correct??? where from???...the site you list is in ga......i'm not certain gman is in georgia.

i do know here the NEXT county over...not even district...you must list your UI...it beats the heck out me and apparently many others.

i just personally think it's unfair to count it because it could or would place people in 13's and if they lost the UI extensions or something along that lines...one could be in and out of court to change their payback plans.

going to court once was stress enough for me. even if one did not have to actually go into court, but having to resubmit paperworks over and over again. wow. i do hope congress does clearly do something with respect to this once and for all, for every state and district and county in the country...so it's clear to all.

we just were fortunate it didn't count.

[melissah34]

No specific advice here but I would like to tell you about our case. My husband was fired in May and I stay at home. We were over the median. Our means test showed $6700 in income and $3600 in expenses. It would have taken I think 2 more months for us to fall below median. Our unemployment compensation would have been added in. We filed chapter 7 in the middle of June on our lawyers advice. I was very leery but went with it. Our lawyer's thinking was that we would be able to get through on special circumstance even if we were under UST scrutiny and we didn't know if he would get a job also making over the median in a month or two and at least this way we had a chance. The lawyer said that they do file chapter 7 for people who are currently unemployed but over median all the time. I did not get a specific though. So we filed 6/23, had our 341 7/22 and my husband landed a job literally the next day and started the following week! The UST was not at our 341 (probably because our 341 was 4 hrs away from where he is) and the trustee just said the UST want me to ask you if you are unemployed still. The assumption of abuse was filed 8/2 which we knew would happen. The assumption of abuse was filed as inappropriate on 8/30. They did ask for paystubs on 8/30 but I believe that we are still okay. I was surprised about this because I was told that as long as the job happened after the 341 that we would not be asked about employment. His new job is at a much lower hourly wage even though he may make over the median with the amount of overtime he has to work. We shall see. Today is day 60. It has truly been a nail biter and still is. On one hand we didn't want a job but on the other we needed income deperately. It seems that it worked out perfectly (knock on wood).

It seems that it would be crucial to know whether your UST lets unemployment "fly" as a special circumstance to the means test. We were told that if the UST wanted to convert us to chapter 13 that there would be no way we could make a payment plan out of our unemployment since it is looking forward income so we would be kicked back over to a 7. I'm not saying this is true, just what I was told.

[tobee43]

No specific advice here but I would like to tell you about our case. My husband was fired in May and I stay at home. We were over the median. Our means test showed $6700 in income and $3600 in expenses. It would have taken I think 2 more months for us to fall below median. Our unemployment compensation would have been added in. We filed chapter 7 in the middle of June on our lawyers advice. I was very leery but went with it. Our lawyer's thinking was that we would be able to get through on special circumstance even if we were under UST scrutiny and we didn't know if he would get a job also making over the median in a month or two and at least this way we had a chance. The lawyer said that they do file chapter 7 for people who are currently unemployed but over median all the time. I did not get a specific though. So we filed 6/23, had our 341 7/22 and my husband landed a job literally the next day and started the following week! The UST was not at our 341 (probably because our 341 was 4 hrs away from where he is) and the trustee just said the UST want me to ask you if you are unemployed still. The assumption of abuse was filed 8/2 which we knew would happen. The assumption of abuse was filed as inappropriate on 8/30. They did ask for paystubs on 8/30 but I believe that we are still okay. I was surprised about this because I was told that as long as the job happened after the 341 that we would not be asked about employment. His new job is at a much lower hourly wage even though he may make over the median with the amount of overtime he has to work. We shall see. Today is day 60. It has truly been a nail biter and still is. On one hand we didn't want a job but on the other we needed income deperately. It seems that it worked out perfectly (knock on wood).

It seems that it would be crucial to know whether your UST lets unemployment "fly" as a special circumstance to the means test. We were told that if the UST wanted to convert us to chapter 13 that there would be no way we could make a payment plan out of our unemployment since it is looking forward income so we would be kicked back over to a 7. I'm not saying this is true, just what I was told.

actually our situation was almost EXACT!!! however, we had one atty saying O no...with that UI you will be thrown into a 13?? i kept asking how is that possible since how can one count firmly on those funds being available....


that "special" circumstances....that's interesting and i believe that's the way we went.

[gman]

Update:

Met with another lawyer again this AM....

First - he informed me that the local JUDGE (not the UST) has been making people include UI and not back it out on the Means Test. He referred to a specific email that his firm had sent out to all associates to be on alert. Now, assuming he is telling the truth, at least I have a definitive answer on this and will proceed with it being included.

With that being the case - I will be +280 for DMI on the Means Test come Oct 1 but almost -$4,500 on Schedule J due to my unemployment.

He suggested waiting if I can - but had no problems filing on Oct 1 even though I am "over the DMI for the Means Test." His argument with the UST and Judge will be my totality of circumstances (being laid off) and that there is no way I could fund a Chapter 13 (which is factual.) I asked if he has had cases like mine before (where one barely fails on the Means Test but easily passes on Schedule J) and he said yes.

His big guidance to me was this....The UST is going to care about my employment (or lack thereof) at the 341 hearing. By filing on Oct 1 - my 341 will likely take place in early Nov. At that time, if I do not have a new job, then I will have been unemployed for 4 months. If I do have a job in early Nov, especially with the income I used to be making ($100k), then waiting until Nov 1 will only push me into a Chapter 13. My whole "case" - in his opinion - rests on my employment (or lack thereof.)

I THOUGHT THIS THROUGH ON THE WAY HOME AND THINK HE MAKES SENSE. DOES ANYONE SEE A FLAW IN HIS REASONING I SHOULD BE AWARE OF???

In a nut, a would file with the presumption of abuse, but he would press on that I am unemployed (again will be for 4 months by the time of the 341), insolvent and can not fund a Chapter 13. If by chance I do get a new job prior to the 341, I would convert to a 13.

I am leaning toward thinking that all things being equal - waiting until Nov 1 only brings more risk [via added time] that I land a new job in the meantime....killing my chances for a Chapter 7.

WHAT DOES EVERYONE THINK?

[tobee43]

His big guidance to me was this....The UST is going to care about my employment (or lack thereof) at the 341 hearing. By filing on Oct 1 - my 341 will likely take place in early Nov. At that time, if I do not have a new job, then I will have been unemployed for 4 months. If I do have a job in early Nov, especially with the income I used to be making ($100k), then waiting until Nov 1 will only push me into a Chapter 13. My whole "case" - in his opinion - rests on my employment (or lack thereof.)

I THOUGHT THIS THROUGH ON THE WAY HOME AND THINK HE MAKES SENSE. DOES ANYONE SEE A FLAW IN HIS REASONING I SHOULD BE AWARE OF???

In a nut, a would file with the presumption of abuse, but he would press on that I am unemployed (again will be for 4 months by the time of the 341), insolvent and can not fund a Chapter 13. If by chance I do get a new job prior to the 341, I would convert to a 13.

I am leaning toward thinking that all things being equal - waiting until Nov 1 only brings more risk [via added time] that I land a new job in the meantime....killing my chances for a Chapter 7.

WHAT DOES EVERYONE THINK?

do it....i like his straight forward attitude...that's the question asked at every single 341....are you employed...what do you do for a living...when was the last time you looked for work...