Childcare and means test

[Lisa2525]

My husband and I are thinking about filing chapter 7. Our income is above median level right now but I have been out of work for the past six weeks for mandatory maternity leave of our third child. I pulled my middle child out of daycare to save money while I was home. The trouble is when I go back to work the daycare for both kids and my oldest's afterschool care will be 1660 a month. Do I put 1660 a month for childcare since that is my expense going forward or would I have to go back and average the month that I had 0 for pulling my older child and the months I only had 1 child in daycare?

It seems crazy to go back and average months when I only had one child and my oldest didn't have afterschool care since school was out for summer.

It makes a huge difference when 1 child's daycare is 600 but add a new child and school starting back jumps it to 1660.

[ccsjoe]

It depends on whether you are talking about the means test or Schedule J. If means test, you take your average expense over the last 6 calendar months. If Schedule J, you can include the expense and insert a comment as to when you'd reasonably expect your maternity leave to end and be forced to return to work, hence need the childcare expense.

[Lisa2525]

We do not pass the means test with the last 6 months average childcare expense. We actually show a disposable income of $700, but when we factor in an increase of $1000 more a month which will start the first week of Oct. we are actually negative, even with my pay going up as I will return to work full time. Im not sure what schedule J is- Im new to all of this!

[ccsjoe]

Hi Lisa. Welcome to the forum.

The means test (form B22A) uses a combination of IRS limited expense numbers and real numbers averaged on a 6 month lookback basis. The sole purpose of the means test is to determine whether you filing for CH7 is presumed an abuse of the relief or not.

Schedules I and J are your real Income and Expense schedules that show what your cash flow is likely to be like going forward. Here you use your real income and expense numbers, including any anticipated increases, for example, your salary increasing to normal because you're leaving maternity leave, childcare expenses increasing because you need to work, etc.

Did you use the IRS tables when doing your means test? How did you do your means test?

[Lisa2525]

We did use the IRS table.

[ccsjoe]

Unfortunately for means test, the only forward looking number calculations you can use are tax related. So the answer is no, you can not use the childcare expense on a forward looking basis on the means test. You can however use it on Schedule J. This might be a case of you having to wait a couple months in order to include it.

Are you using the online means test from nolo? I would suggest that if your numbers don't add up there, you go to the bankruptcy court website and download the actual means test form as it provides some more detail regarding some line items that a lot of people get confused on; maybe that might make a difference? Are the numbers you are using a true average of your expenses and income over the past six months?

[Lisa2525]

So it looks like we'll have to wait a little while. Can you tell me if a monthly dental insurance premium also counts under health insurance? What about a cancer policy? Also, our area gets the federal allowable of 499/ month for utilities. Our electric bill is about 300 alone per month. What all utilities are included here?

I spoke to an attorney about the childcare expenses this afternoon, she says it is very possible to do a special circumstance. That scares me though, does anyone have any info on this?

Any other info for the means test would also be appreciated. Trying to educate ourselves but it's so much info!

[ccsjoe]

So it looks like we'll have to wait a little while. Can you tell me if a monthly dental insurance premium also counts under health insurance? What about a cancer policy? Also, our area gets the federal allowable of 499/ month for utilities. Our electric bill is about 300 alone per month. What all utilities are included here?

I spoke to an attorney about the childcare expenses this afternoon, she says it is very possible to do a special circumstance. That scares me though, does anyone have any info on this?

Any other info for the means test would also be appreciated. Trying to educate ourselves but it's so much info!

On the policies, dental and cancer, yes on both. On the utilities, you may use Line 21 to account for the excess over the IRS table, however, be prepared to prove that beyond any doubt. The trustee may drill pretty hard into it, and it may draw the attention of the UST.

Not sure what she means about special circumstance, my childcare expenses for 1 child, were almost 1K and nobody blinked, there's no IRS guideline for this. According to my attorney, as long as the amount doesn't grossly exceed what is customary for the area, the trustee will be ok. Not sure if that's only in my district, but I'm surprised at a need for special circumstances when you've got 3 children going at 553/month of childcare each sounds reasonable.

[momofthree]

So it looks like we'll have to wait a little while. Can you tell me if a monthly dental insurance premium also counts under health insurance? What about a cancer policy? Also, our area gets the federal allowable of 499/ month for utilities. Our electric bill is about 300 alone per month. What all utilities are included here?

I spoke to an attorney about the childcare expenses this afternoon, she says it is very possible to do a special circumstance. That scares me though, does anyone have any info on this?

Any other info for the means test would also be appreciated. Trying to educate ourselves but it's so much info!

Is it $300 every month of the year, or does it vary by season? You'll need to take your AVERAGE. So, if your electric bill is $300/mo during the summer, but only $100 during the winter, then you'd average it out to $200 per month for the schedule J. Utilities would include electric, gas/propane, telephone, & water/sewer. They may also include cell phone and cable/internet, not sure about that since we don't have either expense.

[tcreegan]

Hi lisa2525,

Hate to be one to throw a monkey wrench into the works........not on the means test, but if you know you are going back to work, that income has to go on Sched I (post-BK income.) Sched J is for your post-BK expenses. I minus J = DMI disposable monthly income. This number needs to be less than a hundred. The good news is that when you go back to work, the childcare expense max's out.

As for passing the means test, many folks leave out items and/or undervalue their estimates of what they spend. Do a search of the forum and find posts about means test expenses, scan them for ideas and comparisons.

Good luck w. the new kid, we have our first granddaughter (2 months already!) and are loving it!

Tom in Colo