Changing what I charge for rent of basement to help with Chapter 7 -- legal?

[sillywalks]

I am concerned about qualifying for Chapter 7, since my son is moving out in January (and I will not file until February). That takes my dmi from significantly negative to slightly positive -- with several expenses the trustee might challenge, pushing me into a 13.

I currently have a renter in the basement who pays $650. I figure $100 for utilities, $75 for tv/internet (included in lease) -- which leaves $475 profit. I have considered reducing her rent to $450 or even less, to reduce my DMI. Can I do this, or would it be considered fraud? Will the trustee question why the rent from $650 to $450 two months before filing? Does it matter, or do i have the right to charge whatever I want, regardless? If the trustee does question it, what do I say?

Is this any different than increasing my car insurance or whatever (which is another possibility to help my DMI)? Will there be a problem if I go back to the original rent after filing? Should I wait a particular length of time, or after the 341, or whatever?

I appreciate any input!

[scorpion35]

what do u think?
as far as i know u are commiting fraud by lying to the trustee .u get caught and guess what?dismissed or worse

[tcreegan]

Hi sillywalks,

...refresh my memory...is your son under 24 and in college? Wasn't your basement dweller facing a job cut-back?

takes my dmi from significantly negative to slightly positive ...are we talking means-test or Sched I&J ? Is slightly positive less than $180 or over?

Are you taking depreciation on the rental part of your house? This is a sometimes forgotten expense...

The yo-yo rent idea sounds too much like "bad faith" for me to be comfortable with it.....I'll bet there is a better way to get you through.

Tom in Colo

[sillywalks]

Hey Tom!

That's why I was asking -- on the one hand, it seems that I should be able to ask whatever I want for the basement rent, but since I have been asking $650, I was not sure if I could change it. What if I did a new lease?

Ultimately, I could ask my renter to leave by the end of January, and then legitimately show I am not bringing in any rent for the basement, but I hate to do that.

My son is 21 and will be full-time college again this semester.

Assuming the trustee accepts $100 in utilities for basement (which is less than half, depending on the month), $75 for tv/internet (1/2 the cost), I figured maybe $50 a month in depreciation. I was not sure if there is an official 'depreciation chart' that shows an allowable amount of depreciation for a basement rental?

So far, the renter's furlough days have been put on hold and I cannot count on them being in effect by the time I file (and wouldn't that look the same to the trustee?).

Depending on how I figure my expenses changes my DMI -- including some expenses that could be challenged and really cause me a problem. On the means test, I do come out with no presumption of abuse, but if the trustee challenges too many of the expenses, I'll be in trouble.

I am planning on adjusting my insurance, because currently my deductible is $1000, which I can no longer afford. I am planning on going to a $0 deductible and possibly adding full coverage on the vehicle my son drives (which is expensive) because I could NOT afford to replace or fix any accident/problem. That is legitimate, isn't it? Or is scorpion right in accusing me of fraud in that regard?

[tcreegan]

Hi again sillywalks!

Remember that since your son is under 24 and a full-time college student you count him in your household size!

Stopping to think about it, depreciation on a room/couple room rental in a house is not going to be much, $20 a month maybe...sorry..getting old here! But do include an amount for maintenance, estimate what you spend in a year and divide by 12 Trustee should have no problem w/ the rental utilities, seem very reasonable

Adjusting your insurance for Schedule J expense is not fraud. You put what you expect to be paying post-BK, get a quote from somewhere to back yourself up on it.

If the renters furlough days are 'reasonably anticipated' in 2011, include a reasonable reduction of the rent on Schedule I Remember this is 'forward looking'

How are you on the means test? Any expenses over the IRS local standards?

On Schedule J, make sure you aren't using "so broke I'm going BK" numbers, use reasonable "what I would pay if I weren't going BK" numbers.

Any expenses you are worried about, post 'em, The ol' run it up the flagpole and see who shoots approach

Tom in Colo

[sillywalks]

Tom, you are Xanax in forum form! Thank you for taking the time to respond, and for being so reassuring. I'll admit that my son moving out in January sort of turned my bucket upside-down in terms of bankruptcy thinking (not empty nest wise, because I know it's the right move for him -- and me!).

I will run some numbers 'up the flagpole' -- hopefully they will be bullet proof! I've tried to anticipate expenses, including dental work (I know I need a crown, and the child-o-mine needs work done, too. Would it be best for us both to visit the dentist and get an estimate of the work?

I have already gotten a year's worth of expenses from the vet, which I averaged out monthly, so hopefully that will fly.

I'll post the other expenses, too -- I think the only expenses over the IRS numbers were housing (my mortgage is $1395 a month -- although being able to use the 2 person household will bump the standard from $806 to $946, which is better) and medical expenses (my Rx cost $125 a month alone).

Thanks again, Tom! You are a kind and generous spirit!