problem: boss may give me a raise, help

[nickifan]

Hello..
A nice but potentially big problem, unless I am misunderstanding the Ch 7 "median income" situation.
I live in Texas, so for this question I need state-specific advice.

I have a partially retained attorney for Ch 7. I could pay her in full shortly and start filing process (though I have not done the questionnaire or taken the debt counseling yet.)

I have been working full time since January; earned very little in 2010.
I make $16 an hour ($2560 a month salary) plus a "health bonus" of $250 a month toward health insurance ($3000 annual), which I just became eligible for June 1.
By my calculations that means an annual gross income of $36280.

That premium has just jumped...and the boss was telling me Friday he was 'considering' giving me more money (in salary) to help me with the premium. Assuming, say, that he raises me to $17 an hour, that's $35,360, plus the $3K health bons = $38360 annual gross income.

According to the Justice Dept. site I just visited, the new "median family income" amount for 1 person in Texas has LOWERED to $38,294...I'm over by less than a hundred dollars!!

So here's my potentially dumb question: Is the GROSS amount all that matters in determining Ch 7 vs 13...or am I forgetting that I will still be able to show deductions/expenses, etc.??

I am so anxious about this I'm considering going to work tomorrow and telling boss NOT to give me more money yet!! I want a CH 7 and not a 13 for sure...I have virtually no assets (9 year old car about it) so I can't imagine a little "extra" money would push me to a 13??


Calm advice appreciated....

[disconapper]

You need to look at more than just the median income. You do not automatically fail if you are over. You need to complete the actual test and list your exemptions etc.

[catleg]

No, it's not gross, it's net of taxes and various types of insurance (medical, disability, term life). You should be fine.

[sunshinepa]

Well, you stated the premium went up........that should maybe end in a wash. I believe I would discuss this with the attorney and proceed with filing ASAP were I in your shoes. A good attorney should be able to get the 7 for you. It is a very small amount.

Have you actually done the "means test" with the new numbers? Are you forgetting things like pet care, over the counter meds and etc. on the test? Also, you probably get an extra 200.00 deduction for your car being over 5 years old. All these things come into play!

You can go to www.legalconsumer.com and do the actual means test for your state, it will come up and tell you exactly where you stand.

[ValleYum]

Don't panic!!

The annualized median income is determined by multiplying your last 6 month's worth of GROSS pay by two - use your paystubs to do this. If you are under, you pass and can file a Chapter 7 bankruptcy - making sure that your income and expense schedules show no disposable income (under ~$117).

If you don't pass, then, and only then, you go to the Means Test to see if you are eligible to file a Chapter 7 bankruptcy. This is where you deduct set items like payroll taxes, health insurance premiums, etc. Use the link sunshinepa gave if you need to do the Means Test.

[catleg]

Actually that is correct. First you compare your gross to median income for your household size, then you do an additional calculation to see if you can qualify by your expenses. You can search for "bankruptcy form 22a" to see the actual form you need to fill out.

And it's true the median income can go down, as the economy goes further into the sh*tter.

[nickifan]

Thanks for all replies...but I'm still a bit confused. I can make under the "median income"...BUT if I have "money left over" (disposable income) each month above $117, I could still be pushed to a Ch 13??

And by the way...on the 16th I'm scheduled for a "pretrial conference" at the local justice court...(Target creditor for a measly $2200 or so) I'm thinking of taking a letter that I have an attorney and do plan to file BK "shortly." I asked the attorney if I paid her in full if she'd give me a letterhead saying so...she suggested that if I am "ready to file" I just skip the conference and they may get a default against me, but if we filed shortly it wouldn't matter.

I guess that's correct but it makes me nervous...I read here somewhere they could go after my checking account with a judgment! (Texas a no-wage garnish state...at least it has THAT going for it...)

[ValleYum]

Thanks for all replies...but I'm still a bit confused. I can make under the "median income"...BUT if I have "money left over" (disposable income) each month above $117, I could still be pushed to a Ch 13??

Yes. It is called "totality of the circumstances" and is used by many bankruptcy trustees and judges as kind of a final say-so on whether or not you qualify for a Chapter 7.

Whether you are under median or not you still have to fill out Schedules I http://www.uscourts.gov/uscourts/Rul...006I_1207f.pdf and J http://www.uscourts.gov/uscourts/Rul...006J_1207f.pdf and show that you do not have enough disposable income to pay back creditors in a Chapter 13.

I hope that makes more sense to you now.

I don't know much about judgments - hopefully someone who is wiser about those will chime in for you.

[nickifan]

Yes. It is called "totality of the circumstances" and is used by many bankruptcy trustees and judges as kind of a final say-so on whether or not you qualify for a Chapter 7.

Whether you are under median or not you still have to fill out Schedules I http://www.uscourts.gov/uscourts/Rul...006I_1207f.pdf and J http://www.uscourts.gov/uscourts/Rul...006J_1207f.pdf and show that you do not have enough disposable income to pay back creditors in a Chapter 13.

I hope that makes more sense to you now.

I don't know much about judgments - hopefully someone who is wiser about those will chime in for you.

Yes that does make sense to me now. Thank you so much Valleyum(love the name, and your kitties!) Thanks to all others who replied so quickly too. I have printed out the Schedule I and J forms as advised and will see where I stand before "lawyer tweaking"....

Thanks so much for all the wonderful help in this forum!

[daylate]

This whole means test, Schedule I & J thing can be quite confusing. Here is a link to the actual code that deals with excess dmi http://www.law.cornell.edu/uscode/us...7----000-.html I think the dollar amounts are outdated - I think the 10k is now 11500 or so.

You should read it and then do a search through the forum for more info on the subject.

Good luck