Opinions Wanted!

[ValleYum]

For an over-the-median filer, where do you think the largest negative number should be?

On the Means Test? Or on Schedule J?


This may sound confusing but here goes my attempt at explaining why I ask:


Hubby works for a railroad. No 2 paychecks are alike. Ever.

The attorney's office did the average of 6 months of dh's pay for the Means Test and took withholding numbers for lines 25 and 26 from Schedule J. This leaves us with a DMI on the Means Test of -$399.

For the Schedule J - they just doubled a random paycheck's gross, withholding and involuntary deductions (wth?!?). This meant that the gross wages on Schedule J and Means Test varied by ~$700. We ended up with a DMI on Schedule J of -$13.

If true 6-month averages are used on both forms on all the appropriate lines - it will change my Means Test DMI to -$133 and my Schedule J DMI to -$652.

The paralegal said she would pick another paycheck and change the figures on the Means, I and J - just to let her know. BUT- I want her to change it to the 6-month averages from the actual 12 paychecks dh earned since his pay is so random and can vary by 1-2k from one month to the next.

My *personal* thought on the matter is that the Means Test is almost so ironclad in the deductions that are allowed that as long as you are under $7025, you pass. I think that Schedule J is where the Trustee can take a red pen and do some real 'editing' and slap you into a 13.

Your thoughts are welcomed. Sorry in advance if it was TL;DR.

[oregonpilot]

WOW.... VY those are some really good questions. I'm not sure..BUT...
I think the means test is more of a starting point to see where you stand coming out of the gate. What your DMI or should i say -DMI is really what your real bottom line is on Sch J. IF there is anything left over to go toward creditors.
SEEMS that doubling just any random ole paycheck really wouldn't show your real income seeing that there is such a large swing in the amts of the checks.
I think that is what you are asking.
For me...when my atty was calculating my income. we took the REAL amts for each month. I had a really big swing in income..had 1 month that was almost 4k and 1 month that was 35.00. So actually added up each month (no random months)and then dividing by the 6. My expenses we averaged 12 months worth seeing that most of my expenses come in the late fall which wasn't falling into the 6 month calculations.
Good to have as large of a -DMI that you can honestly have ... that gives you some wiggle room if the red pen comes out.

NOw you have to remember that i only know diddly squat and my ramblings may have no merit. LOL
Maybe someone can answer your questions better.

[free2breathe]

My opinion, worthless as it may be lol, would be that the means test is a true and honest look at the last 6 months. The I and J are future expectations. In that case, I would think the 12 month average would be the ideal number to use on I to come to the end result of DMI on the J.

*edited to add that I have no idea which one will carry more weight with the ability to file a Chapter 7. Got me researching though! Actually, I would suspect that the number on the means test is initially most important, just because it does indeed determine the ability to file 7. I wonder if I'm over-simplifying or over-thinking. hmm

[oregonpilot]

So..if they are just taking a random sampling of the paychecks (for the means test)that isn't the real average for the 6 months.

f2b....Nothing sounds worthless. LOL

[free2breathe]

Ok, here's something from e-how that explains it fairly well.

" Disposable Monthly Income
•Even if you are over your state's median income based on the means test, you still may be eligible to file a Chapter 7. Disposable monthly income (DMI) is the amount of money you have left over every month after paying all of your allowable expenses as defined by the IRS. If your DMI times 60 exceeds $11,725 as of 2010, you cannot file Chapter 7. If your DMI times 60 is between $7,025 and $11,725 you can file Chapter 7 only if this amount equals 25 percent or more of your unsecured debt.

Abuse of System
•The U. S. Trustee's Office reviews all bankruptcy filings to prevent abuse of the bankruptcy system. Even if you pass the means test, the U.S. Trustee may file a motion to dismiss or convert your Chapter 7 filing to a Chapter 13 filing if the "totality of circumstances" suggests you are taking advantage of the bankruptcy laws. Even if your DMI from the means test indicates you "pass," if your Schedule I income is substantially greater than your Schedule J expenses in your bankruptcy petition, the U.S. Trustee may still get involved. "


So, as long as both DMI figures are are below the limit, Chapter 7 should be allowed, right?

And, yes, oregon, the way I understand it, the means test figures should be verifiable income for the last 6 months. I should look that up and post the code as well, shouldn't I? lol

[oregonpilot]

ahhh i didn't really understand what the $7025. was referring to.
I'm hoping i didn't confuse the OP with my blather.
This wasn't pertaining to any of my stuff so was really curious and wanted to learn what its about.
Thanks

[free2breathe]

Ok, this is the instruction from Form 22A "All figures must reflect average monthly income received from all sources, derived during the six calendar months prior to filing the bankruptcy case, ending on the last day of the month before the filing. If the amount of monthly income varied during the six months, you must divide the six-month total by six, and enter the result on the appropriate line."

And this is the instruction for Schedule I INCOME: (Estimate of average or projected monthly income at time case filed)

[free2breathe]

ahhh i didn't really understand what the $7025. was referring to.
I'm hoping i didn't confuse the OP with my blather.
This wasn't pertaining to any of my stuff so was really curious and wanted to learn what its about.
Thanks

I get into trouble getting curious. My mind starts racing, my fingers start typing, I pull up sites right and left. In the end, I usually end up with a headache. Who knew bankruptcy could be so intriguing?

ValleYum, I think you're right in that the trustee can really analyze that Schedule J and rake you over the coals if you can't back up your expenses. If he can "trim the fat", so to speak, enough that you reach that nasty "Too much DMI" spot, into 13 you go.

[oregonpilot]

It's really cool. Now that I'm DONE, and not stressin about anything. Holly cow,,,what am i gonna do now. hahahaha
It's facinating stuff.
My sweetheart has been asking me...What are you going to obsess about now.
So im just learning what DMI means....Dumploads of Mostly Income! right?

[ValleYum]

LMAO I take a nap and miss this?!?!

They are *interesting* questions, oregon. And f2b? I get crazy when I don't know the right answer (can we say control freak?)

Thanks SO MUCH for the input!!

They did use the average of 6 months gross pay (12 checks) on the Means Test - but not for the taxes or involuntary deductions. That still puzzles me.

As to the 'look forward': his annual income has averaged pretty close to the same for the past 2 years so an average would work for the Schedule J, too. I think I am going to ask that they use what I feel are the 'correct figures'.

Re: the "under $7025 and pass" comment I made earlier - I do realize that there is still a risk of being dismissed for totality of circumstances. (Just another thing I worry about on an hourly/daily basis!!)

We have our meeting with the big boss attorney on Thursday to go over our case prior to filing and I presume any changes we need to make can just be entered into Best Case and reprinted for our signatures then? Even if we have to come back later to sign - I am not signing until I understand and approve of everything. Maybe I am just borrowing trouble and all will be revealed on Thursday.

Thanks for your thoughts oregon and f2b!! I was worried that I wrote my question like VCR instructions and everyone was just gonna let my post flash on 12:00!!