Past median Fail means

[johnf]

If you pass the median test but flunk the means test (My wife and I have at least 1500 DMI) can you still get a chapter 7 discharge My lawyer said I could file We were ok because we passed the median test,but want the us trustee look for DMI regardless of the median test? thats his job right Thank you for any advise

[geye]

If you're under median you don't take the means test. Schedule I and J have to still be filled out, and that's where you need to have no DMI.

[justbroke]

Passing the median income test only means that you complete a portion of the Means Test. Being under-the-median allows a filer to skip Section 4-8 (IV through VIII) of the means test. Being under the median income, still requires the debtor to complete sections 1-3 (I through III) of the means test.

When you are under-the-median, it's assumed that you do not have the means to afford a Chapter 13 (or be able to pay a "meaningful" distribution to unsecured creditors during that Chapter 13). However, the Means Test is just but one test of a two part test. The second part is on the Schedule I and Schedule J.

While the overwhelming super-majority of people who are under-the-median income file for Chapter 7 receive a discharge, some United States Trustees (USTs) may take a dim light on having excessive "disposable" income on Schedule J. What they usually look at is whether you're surrendering property in the Chapter 7, which increases your "disposable" monthly income (DMI). While the Means Test allows you to include secured debt that you are surrendering, Schedule J does not.

Here the UST can't seek to dismiss/convert your case because you pass the Means Test (under 11 USC 707(b)(2))... they can go for a "Totality of Circumstances" dismissal (under 11 USC 707(b)(3)). This is why you and your attorney will make sure your numbers work on Schedule J.

Again, almost all under-the-median filers receive the discharge even with positive DMI on Schedule J, but some USTs are very particular.

Are you surrendering property? Is this what's giving you the atrocious DMI? A DMI of $1,500 a month is a LOT OF MONEY. If you're surrendering a home, for example, you need to offset the cost of renting.

[nc73]

Yup I was under median but I think my dmi was positive. No idea by how much as I didn't care to know. Still got my discharge!

[helpmeout]

I passed the median and had over $1K in DMI on the schedule J. But that was because there was no rent as I am living in the house until the bank forecloses. My chapter 7 has been discharged and closed. But that was because of the totality of circumstances. I'm not always going to have no rent. Had my DMI been $1K with a rent payment included, I would have been pushed into a Chapter 13 or dismissed.

If the DMI is after all living expenses, including rent/mortgage, you won't be able to do a 7. Just how experienced is your attorney? And how many did you interview before hiring one?

[scorpion35]

what if u don't pass the means test but have a negative $600 DMI?

[scorpion35]

What if u don't pass the means test but have a negative $600 DMI?

[momofthree]

A trustee will salivate over $1500/mo dmi! That is $54000 that can be paid to creditors over 36 months. Are you sure you've included every allowable expense possible?

[tcreegan]

Hi scorpion35,

Just to clarify.....
Do you mean you fail the means test but have -600 DMI on Sched I & J?

Tom in Colo

[johnf]

Can you bloat your expenses on the schedule to make it show no dmi Is this something thats commonly done Thank you for all your help

[newbie2]

Can you bloat your expenses on the schedule to make it show no dmi Is this something thats commonly done Thank you for all your help

No bloating. By all means though make sure you are listing everything you spend money on for the support of yourself and your family. Also, don't forget about those items that you have been neglecting because you've been trying to rob Peter to pay Paul. For example, if you've been neglecting healthcare, make sure to add in the allowed healthcare expense. (Same for clothing, etc.)

[scorpion35]

yes

[scorpion35]

Hi scorpion35,

Just to clarify.....
Do you mean you fail the means test but have -600 DMI on Sched I & J?

Tom in Colo

yes

[ccsjoe]

scorpion35, if you fail the means test but have a realistically negative DMI on J of -600/month, you should be ok under totality of circumstances. You probable wioll get flagged for presumption of abuse, but schedule J will handle that for you. Just my logical opinion here.

[justbroke]

scorpion35, if you fail the means test but have a realistically negative DMI on J of -600/month

This is only possible when there's a loss of income that is causing the Means "Test to be skewed. Some Court, well... some Trustees, will still attempt to have your cased dismissed as an abuse. However, the law (11 USC 707(b)) actually grants judicial discretion for this because it reads that the court "may" dismiss for abuse.

This will probably vary by District, Trustee, UST and even a particular case.