Income pre filing vs Post Filing

[Cavedog]

Dont think it will be an issue just wanted to see if anyone had any viewpoints.

Florida family of 4. Filing Ch 7 first week of Aug.

We are comfortable below the means figure. Good news is that starting in the middle of August my wife has been offered a job making $20,000 a year with the possibility of going to fulltime within 6-12 months of full time making double the amount, so long term we dont want to pass on this chance.

My income is approx 55 K. Our 6 month look back is fine, but post filing we are now anticipating our household income going to $75K. Because she is going to work, we are now going to keep her vehicle (more schedule J deductions) and pay for daycare (a new schedule J deduction), and we are now able to raise some of our costs like food to a higher amount (not exceeding the IRA limits), get cable TV.... Bottom line is that our schedule I will still be about the same with the schedule J.

Will this be an issue?
Thanks

[daylate]

I know you will get different opinions on this but my take is you will be ok if you disclose the new anticipated income and the new expenses. How you do that is a question-some will say nothing is definite so don't mention;others will say disclose your current situation as of when you file and then disclose the changes in the part that asks for changes; if it were me i would file the I & J as if it was in place and if anything changes from that amend the schedules or disclose at your 341. Bottom line is you will be ok if your new I&J don't give you too much disposable income. Good luck.

And best advice is to discuss with your attorney.

[tobee43]

if i recall...florida the median income varies from county to county. i know in ours it was 52k for two people. i know we were somewhat shocked that a family of two where we lived was that "high". or to better word it, i expected it for some reason it would be less.

i just check out mine...it was approx 11k on schedule i and then it was -3k on schedule j.

our means test was way different after all the ss exemptions from ss, pension and unemployment insurance. i think they put most weight on that. really.

[debee]

Don't count your chickens before they hatch. Sometimes job offers get retracted.

If it were me, I would fill out schedule J according to the instructions - expenses at time of filing - and include the potential new job income and job-related expenses (daycare, business warbdrode, etc) in the section where you mention anticipated changes.

I would make sure your schedule I/J sum was negative enough that the new income doesn't put you into a chapter 13. You could get cable before you file. Increase the grocery spending as of date of filing. Runs your numbers so when the new income (less daycare and a modest wardrobe budget) gets added in, you're still good for the 7.

[Cavedog]

Great advice debee. I like that idea! My first drink tonight will be for you..

[daylate]

I was thinking about this some more and the question arises as to why not just wait to file until the wife starts the job? Then you would have an I & J that reflected your current situation without all the other requirements to explain all of the changes. To me keeping it straightforward is better than saying we're going up 20k in income but will find enough expenses to offset that increase.

[backtoschool]

I agree with both Debee and daylate. I think that it is very common in this economy for one spouse to go back to work and for income (and expenses) to go up. The trustee is not going to think twice about it. I also think however, that the less complicated explanations that you give, the better.

I and J should reflect current expenses, so I would wait and until they are current expenses to file and then take extra food, auto/gas, cell phone, day care and any other work related expenses that you now have.

[debee]

My first drink tonight will be for you..

Cheers to you, too.

I agree with daylate, myself (lol) and B2S.

I can see the value in having a blank line item on your schedule J and I can see the value in having 20K less in certain income.

The important thing for you is going to be your DMI.

There's been some debate on the forum about schedule J expenses. In my opinion, the correct approach is to use fixed expenses where applicable (rent, mortgage, car payment, insurance, etc), averages for semi-fixed expenses (utilities if variable by season, phone service if long distance/usage charges vary, etc), and stretch toward the standards in the areas where you can because chances are you have scrimped on yourself in order to pay debts you are about to discharge.

If you fill out schedule J based on your historical expenses, you will end up with DMI equivalent to your current debt load.

This is where "current" expenses take on the quality of "projected". You don't have to live like a debtor anymore. You absolutely can and should take advantage of the standards and increase your projected spending accordingly. I've never heard of a single chapter 7 debtor not receiving their discharge because their grocery/household budget was approaching the IRS standard.

Also, in the event that you file before/if your wife starts working, remember that a job doesn't change the IRS standard for car expenses, food, etc. Presumably, she will eat breakfast, lunch and dinner whether at home or work. She may use less gas dropping the kids at daycare than she uses now driving to school, playdates, the playground, etc. I'm a stay-home Mom and I use my cellphone more and spend more on gas than my husband does. I eat more too. But let's not go there.

Point is, filing either way will work for you if your DMI is right. Just make the most of your allowed expenses. Any money left on the table is available to fund a 13.

[tobee43]

just be very careful is all i have to say. and, wait to see how it all turns out. again. just be careful!!!!!

[Cavedog]

As always, I appreciate the words of experience and advice. Tobee, your comment of 'be very careful' has really got me thinking. I searched 'schedule J' here on the forums and I read several really bad cases where the trustee's picked apart a schedule J, found several hundred dollars, and the 7 got into a 13. The part time job of hers might have to wait.

By the way Debee, I had that first drink for you, but had 3 for me afterwards :-)

[debee]

Below median filers don't get the same kind of scrutiny as filers over median.

Something you can do to make sure your schedule J is in good shape is to print out the US Trustee's Position Paper on the Means Test alongside your Nolo Means Test (so you can see the standards for your county) and a Schedule J.

The reason you do this is because the UST Position Paper breaks down the IRS Standards and the categories but schedule J does not. For instance, line items 4, 5 and 6 on Schedule J sum to only one IRS Standard amount. If you exceed the standard amount when adding the three lines together, there will be grounds for an objection - unless you can document that it's a "reasonable and necessary" expense - that will hold up in court.

The only time they bother objecting is if they can get enough DMI together to fund a 13. (Something in the $117-$195 range.)

You can see the UST's Position Paper here: http://www.justice.gov/ust/eo/bapcpa/index.htm Just scroll down and look on the left for the PDF on chapter 7 issues.

[sunshinepa]

I agree with Debee......below median filers do not get the scrutiny that those above the median do. I was so worried as my attorney put my expenses way over the standards for food, clothing, medical and even home maintenance. The ironic thing was that it was totally unneccessary. I would have been fine with the standards.....go figure. Anyway, the trustee here in PA never blinked an eye, never looked at any bank statements!!! The only documents he looked at were my home value and my current income tax return. I had even spent my 1049.00 refund and he never asked me about the refund after looking at the return.

[tobee43]

As always, I appreciate the words of experience and advice. Tobee, your comment of 'be very careful' has really got me thinking. I searched 'schedule J' here on the forums and I read several really bad cases where the trustee's picked apart a schedule J, found several hundred dollars, and the 7 got into a 13. The part time job of hers might have to wait.

By the way Debee, I had that first drink for you, but had 3 for me afterwards :-)

i know we are in the same district as you, and it's going to depend on who you get as a trustee. there are a few that are sticklers...that's all i'm saying. personally, i would wait. we did...two years if you can believe that. just to say "no" to all the questions except, i think there is ONE question that has "within" 10 years did you blah blah....that's on the florida state petition.

this district has become "different" since our time of filing, and it's just i wanted to relay that to you. it appears there have been so many filers that once again depending on who it is that you get, will also depend on what they want. a perfect example is this.

most trustees ask for 2 years tax returns and 6 months back bankstatments. well, our trustee, she wanted 3 years and also we had to present a ton more info and we were WAY under the median. that's the only reason, i'm suggesting just be as careful as possible. plan this like a chess game that's all and always be truthful!!!! best of luck, and i know you'll do fine.