341 Meeting Continued partially due to Ransom Ruling

[dontburnthep]

Lurker but new poster here.

We had our 341 this morning. We pass the means test, but barely. The Trustee/BK Administrator had several issues with our budget. We are above the national standards due to a student loan that will enter repayment next month but is not currently in repayment, so our lawyer included it in the budget section instead of the debt payments. That is $400 above the national standard of $1371 for a family of four. We also have a relatively large number of pets, and those costs are more than the average as well.

He also challenged lines 23 and 24- our two vehicles that are paid for, based on the recent Ransom ruling. If we lost those amounts, we'd likely fail the means test. although we may still squeak by if he accepts the student loan and pet expenses.

Since the Ransom ruling is so recent, there's probably not much experience with it's ramifications. Is anyone else in the same position?

And second, is it just a matter of the Trustee/BK Administrator making a judgment call on whether we have enough discretionary income to fund a chapter 13?

I knew we were very borderline on the means test but I didn't expect such in depth questioning at the 341. And further, our meeting was first thing this morning, and he emailed our lawyer at 4PM Friday with these questions. Not much notice...

[backtoschool]

In most districts student loans are not an allowable expense. If you are close to being kicked into a chapter 13, and putting your student loans into forbearance for the period of your chapter 13 would free up enough disposable income to fund a chapter 13 plan, then the US Trustee will try to disallow the student loan expenses.

Paid-for vehicles are also going to be an expense that the US trustee will try to adjust in order to create enough disposable income to fund a chapter 13.

It takes about $90-100 a month in disposable income to fund a chapter 13. If the US trustee can come up with that by putting your student loans into forbearance and/or dissallowing some of your car expenses under Ransom then I would expect that to occur and be ready with alternative expenses if you want to try for a chapter 7.

[dontburnthep]

Thanks for the reply. We have exhausted all forbearance and deferral options so the $400 will definitely be due next month.

I think they can get $100 in disposable income with the cars.

[backtoschool]

There is a special bankruptcy forbearance/deferrment for student loans. It is automatic from the time you file until you are discharged.

[dontburnthep]

Should I post questions about converting to a 13 here or in the 13 forum? I'm just wondering about the process of conversion as opposed to filing 13 from the outset.

[debee]

I wouldn't roll over and die just yet.

You need $117/month in DMI on the means test in order to get the "presumption of abuse". You can rebut the presumption if that amount x60 is less than 25% of your total non-priority unsecured debt. If you have $195.41 in DMI, you get the "presumption of abuse" period.

There is an additional $200/month operating cost available to filers who reside outside the 5th, 7th, and 8th circuits. You are in the 4th circuit so I would discuss this with your attorney to see what you can do. The cars have to be paid off and either be older than 6 model years, or have more than 75K miles. This info comes from the UST program's position paper on legal issues arising under the ch7 means test. You can view the paper here: http://www.justice.gov/ust/eo/bapcpa...ne_by_line.pdf

Since your attorney put your student loan into the food/apparel expense line, I wonder if he didn't make some other mistakes. It would be great if he did - especially if he did not include all your allowable expenses. I would look into that possibility before giving up. You can use the position paper in the link above to help you understand what expenses go where and do your own online means test at the link below. All the national standards/local standards will be filled in for you. Examine each category of expense carefully for anything that was not included in your original means test. Come back and post if you're not sure what you can include. http://www.legalconsumer.com/bankruptcy/nolo/

eta: The UST will advocate his position, you and your lawyer have to advocate yours.

[dontburnthep]

Thanks. I went back through the petition and he listed the SL's on the Schedule J under other installment payments, and listed it as currently deferred but will become payable in April. I'm sorry if I said that wrong in my first post, I had just gotten home and was/am fairly freaked. Did the lawyer do it correctly?

117 a month X 60 is less than 25% of my total non-priority unsecured debt (way, way less). So that's good.

Both cars are paid, are older than 6 years and have more than 75K miles. One is a 1990 and cannot possibly last much longer. The other is an 01.

I will go through the links and do the means test for myself.

I'm not about to give up yet! But do want to consider what a conversion to a 13 would mean so that I can plan.

Thanks again. I have actually filed a 7 pro se for my spouse back before the 05 laws took effect. But the new laws confuse me greatly and I admit that I have not done enough research.

[debee]

... he listed the SL's on the Schedule J under other installment payments, and listed it as currently deferred but will become payable in April. Did the lawyer do it correctly?

I have no idea about student loans. Hopefully, b2s will come back to this thread to answer your student loan questions. Meantime, I would do as she advised and look for alternative expenses for schedule J as well. Don't count on the student loans as an allowed expense. I would go through your bank records, check books, etc for the last several months and look for expenses that you might have missed first time around. Also search the forum. Good luck to you.

[backtoschool]

Student loans are not allowable in most districts because they can be deferred during bankruptcy. They should not be listed on any of the schedules or counted as part of your disposable income (or lack thereof). I would assume that the student loans are not an allowable expense, and I would make up that amount in insurance, medical expenses (including over the counter medications) etc, and other allowable expenses you may have overlooked. As debee says, you need to be between $110 and $150 in disposable income to be kicked into a chapter 13.