We Fail Means Test, but have Insufficient Income for Ch. 13 payment

[sunflwrgrl13]

Ok, so we are in an unusual situation, compared to most others I've seen on here. Our situation is this:

- I lost my job in Feb and have been on UI since then.
- When our lawyer ran the numbers, we are several hundred over the means test (like at least $700/$800). And that's all due to the fact that I've been getting about $1500/mo on UI
- Our Schedule I & J show that we are in the hole about $800/mo because my UI will be ending this month.
- I'm going back to school full time in Jan, so even if further UI extensions are approved by the government, I won't be eligible because of returning to school.

So the past 6mo income really is not indicative of what our future income will be. Our lawyer wants to go ahead and file our Ch.7 on Nov. 15th, and include an affidavit indicating that I've been out of work for 9mo, have not been able to find employment, that my unemployment will be ending and that I am returning to school for re-training. He said our situation is not dissimilar to a recently retired person that may have had decent income in the last 6mo, but will be making far less in the future on social security.

He assures us that we should come through this just fine, even with a presumption of abuse on the Means test, and that the trustee can't turn this into a Ch13 because we can clearly show on Sched. I & J that we do not have sufficient income for a Ch. 13 payment.

So is this a situation that anyone has read on here before? I couldn't find any story similar to ours on here. Do you all think that we will have a strong likelihood of success with our filing?

[wipetheslate]

Why the hurry? Why not just wait until your 6 month lookback income passes the means test?

It could work filing Nov 15, via the "totality of the circumstances." But I personally wouldn't risk it. Bankruptcy is not meant to be pre-emptive or for a minor and temporary financial hardship, hence, the 6-month lookback. Worst that can happen is that your case is thrown out and you have to wait 6 full months to refile. Again, why risk it?

[sunflwrgrl13]

The biggest risk is due to the fact, that with only my husband's current income, we would barely pass the means test. If he gets a bonus (which is possible) in Dec or gets a pay raise in the next 6mo (also a possibility) we may not pass the means test -- we just don't know what the next 6mo will bring monetarily speaking, but we know the situation right now. Not to mention the fact that the median household just dropped by $1100, and there is no way of knowing if it will drop even further in the near future (as it seems to be re-evaluated every March too), leaving us SOL.

Also, as we have already missed the last 3-4mo of payments on our 1st and 2nd mortgage, we only have another couple of months before they will start the foreclosure process. I have no idea how we could stop that process if we had to wait another 6mo to file.

And to be perfectly honest, we just want this whole mess behind us. We want out of this house, and just want to move on to the next stages of our lives.

[newbie2]

sunflwrgrl, if you are comfortable with your attorney, and also comfortable with the financial picture that your attorney and you worked through, then go ahead and file. You don't show any disposable income, and many others have successfully been discharged in a Chapter 7 and over the median income. Also, you can't be forced in to a Chapter 13. It is voluntary.

[clevelandmom]

Hi Sunflwrgirl: I just filed my Chpter 7 today "WITH A PRESUMPTION OF ABUSE" because we, too, failed the means test. My husband has been unemployed since mid-August of this year. Last year, he was laid off for 6 months. He is in construction, and the work just isn't here right now. So we, too, have "special circumstances" for filing our case. Also, I have a judgment against me from one cc (we stopped paying cc's last years when he was laid off so long the first time). Our attorney is of the opinion that there is NO WAY they will dismiss or try to push us in a 13 because we, too, are -$900.00 on our Schedule J. Basically he said that even though we don't pass the Means Test this month, we would next month - but the reason we went ahead and filed is because of that Judgment filed for Garnishment against me with my employer so we are trying to stop that. So when we go in front of the Trustee next month, we will not only have passed the test by that day, but we can also explain (if he asks) that we had to file a month early to avoid a garnishment. Hope this helps and best of luck to you!

[tcreegan]

Hi sunflwrgrl,

I've seen several posts of folks in your situation, and they made it through. Also have read several cases where the judge ruled that even though the debtor was over the limits for a Ch 7, there would be no $$ to fund a Ch 13 plan so the Ch 7 was approved.

Failing the means-test will flag your case for the US Trustee, but eventually the sched I minus sched J will be the deciding factor. Go with your attorney, they have your back...

Tom in Colo