10 days after 341 - Insufficient Information Necessary to Make Presumption of Abuse

[justbroke]

They just bought themselves some more time.

Alas, but they didn't buy more time. It is easy to fight these frivolous filings, if indeed this one is. One Judge put it like this (and don't quote me). There is nothing in the code that allows the UST to file a "statement" that they are "still looking into" the presumption of abuse. They must file a statement within the 10 days that there is a presumption of abuse or there is not one!

11 USC 704 (b)(1)(A) the United States trustee (or the bankruptcy administrator, if any) shall review all materials filed by the debtor and, not later than 10 days after the date of the first meeting of creditors, file with the court a statement as to whether the debtor's case would be presumed to be an abuse under section 707(b);

Of course, some Judges let this slide. If the UST had issues, the UST should have attended the 341 Meeting and made sure that the meeting was continued, not concluded. Hypertechnical procedural maneuvering!

[kphipps34]

Ok heres what I got from my lawyers office today - Signed by the Secretary at the Law Office

Please provide the following within 5 days:
1. The identity of all dependents claimed on your 2009 and 2010 income tax returns
2. The gross monthly income of each adult residing with you
3. Proof of tithing since the date of filing Chapter 7
4. Most recent paystub
5. All orders and agreements with respect to child support and child custody
6/ Most recent earning statement for all retirement and investment accounts
7. Most recent bank statement for all accounts

Now I provided my tax returns that list all dependents. A little background my mother and father live with me - I have a spouse and 3 children and I claim my sister as a dependent as I support her as she cares for my parents and drives my dad to dialysis three times a week.
All income was reported as my parents only income in social security
All other items were provided prior to filing.

My child custody agreement states that I am responsible for taking my children to their father back and forth 6 times a year

Any idea whats going on with this repeat requests for information????

[justbroke]

I think that this means that the UST is questioning your expenses outright. I agree that giving them your (non-transcript) full tax return gives them dependent information, but it's okay to provide it again. It is the UST's job to really poke at over-the-median income cases. Since you are supporting adults, the UST is very interested in your household arrangement and the income of the other individuals.

The best thing to do is not to fight he paperwork request, but fight any motion to dismiss. I guess this is all about "picking" your battles. You don't want to appear uncooperative when it comes to paperwork because you are required to work with the UST/Trustee. If they go for the 11 USC 707(b)(3) dismissal (also called the Totality of Circumstances dismissal), then you fight that.

From the little that I know of your case... the requested information is not unreasonable. You can prove tithing simply by showing it itemized on your tax returns. If you don't itemize, then you'll need to show canceled checks or a receipt/document from the church/entity showing what you paid during the years 2009 and 2010. I'm guessing that you may have listed 10% for tithing on your Schedule J and the UST wants proof since 10% could be significant (if you are over the median).

You stated that your parents are on SS (old age), but their income is in question... to the extent that they contribute to your expenses. It will be interesting how your attorney approaches this since I'm thinking that the UST is on the fence and considering a 707(b)(3) motion. If I were the UST, I would concentrate on 707(b)(3) and not the Presumption of Abuse under 707(b) at this point.

[kphipps34]

Thanks. Yes I have canceled checks for tithe. My only worry is my parents social security income. They truly don't contribute to the household at all.. All of their income goes for medical insurance, term life insurance, credit card payments that are only their accounts and then they are broke. I'm sure the trustee is questioning why I claim my sister but she is the full time caregiver for my father and drives him to dialysis three time a week - among other things and I give her money for her living expenses . I am gathering all this documentation to get to my lawyer in the morning. I know this will all be worth it in the end but......I have a complicated high income case. It took me year to find a lawyer that would even look at my circumstances beyond my income. So I'm praying this flys.

[kphipps34]

Update. The lawyers office says I have to submit my parents social security monthly income and their expenses. I didn't get to talk to the lawyer but the question is how can the trustee ask for that when social security income is exempt income?

[catleg]

It could be that the UST simply hasn't had time to review the case and yet is "interested" in doing do, thus the mysterious statement.

[sunshinepa]

Update. The lawyers office says I have to submit my parents social security monthly income and their expenses. I didn't get to talk to the lawyer but the question is how can the trustee ask for that when social security income is exempt income?

The trustee can ask for anything he wants, you must provide it. He is looking to see if you parents have any income left over would be my guess. If they do, he probably thinks they may be giving you some of that. Just provide what he wants so things can proceed. Let your attorney do the worrying, it's why you pay him.

Good luck.

[justbroke]

Update. The lawyers office says I have to submit my parents social security monthly income and their expenses. I didn't get to talk to the lawyer but the question is how can the trustee ask for that when social security income is exempt income?

This is not a question about whether the Trustee being allowed to ask for anything. There are limits to what they can ask for, but you just give it to them anyhow.

First, your parents social security income IS income if your parents pay any of your expense. Remember, that the definition of CMI (current monthly income) is income received from all sources, exclusive of SSA benefits. You don't personally receive SSA benefits, so any money that your parents give you or pay towards the household expenses, including food, is an offset to you since it's "regular" and used for support.

This is why I say that you have to just defend anything should the UST decide to file an 11 USC 707(b)(2) or (b)(3) motion to dismiss.

sunshinepa is right on the money (pun intended). The UST is looking to what extent your parents are contributing to the upkeep of the household. How many did you claim as dependents? Since you claimed your parents, and you claim that they feed themselves and provide all their own necessities, then this is an offset that the UST may want to explore. If I'm reading the UST's actions correctly, this is exactly what they are looking at.

justbroke's study guide: Garnishment of SSA is prohibited by other sections of the United States Code. The amendments to the Bankruptcy Act in 1995 (BAPCPA) only clarified that SSA income was not subject to the Bankruptcy Code by excluding SSA income from the definition of "current monthly income". The problem, in this particular case, is that it is not the debtor that is receiving SSA income. So, while the parent's SSA income is protected, the offset of the parent's contribution to the household is "income" for purposes of the debtor. Otherwise, anytime an SSA recipient spent money then the person receiving it could claim that it's an SSA benefit and it would be protected from garnishment. The law just does not work that way.

[kphipps34]

Well here is an ugly update. After providing more documentation to the US Trustee. (another check stub, bank statement and more proof of tithing) I got a letter stating it has determined that the debtor's case is presumed to be abuse under 11 USC 707 (b)(2). I read the information posted under pacer and it says that there a couple things on the means test were double dipping. e.g mortgage and car expenses. Kinda angry because it looks like my lawyer was aware of this on the 15th and today it the 18th and I haven't even heard from him. Have a call into his office now. Scared to be put in a 13 because the payment will probably be high and scared to let the case be dismissed because I was being garnished prior to filing. (1200 a month) Just sick right now!!!! WHAT NOW???

[IamOld]

Good grief, so sorry to hear this!!! First, get the lawyer on the phone - not paralegal the atty - yell if need be!

What do they mean by "double-dipping?" Atty didn't fill out form correctly????

And, you may really want to find out what the 13 payment would be...maybe it would be manageable or even less!

Well here is an ugly update. After providing more documentation to the US Trustee. (another check stub, bank statement and more proof of tithing) I got a letter stating it has determined that the debtor's case is presumed to be abuse under 11 USC 707 (b)(2). I read the information posted under pacer and it says that there a couple things on the means test were double dipping. e.g mortgage and car expenses. Kinda angry because it looks like my lawyer was aware of this on the 15th and today it the 18th and I haven't even heard from him. Have a call into his office now. Scared to be put in a 13 because the payment will probably be high and scared to let the case be dismissed because I was being garnished prior to filing. (1200 a month) Just sick right now!!!! WHAT NOW???

[kphipps34]

Here's the two things on the motion to dismiss. Guess the attorney messed up some lines on the means test. Which really sucks because I paid him 5000 to file this. UGH. Yes I was thinking that too about the chapter 13 payment probably wouldn't be as much as the garnishment.

On line 17 of the means test form (“marital adjustment”), the debtor deducted $1,831
from the $12,020 current monthly income figure. The $1,831 figure consists of: $633 for
taxes; $37 for HOA dues; $588 for “husband’s mortgage payment;” and $573 for student
loans. The debtor later clarified that the $588 figure is the difference between the husband’s
monthly mortgage payment and the IRS housing standard (as shown on line 20B of the
means test form).
20.
In this case, amounts the debtor’s husband pays for the couple’s residence are paid on
a regular basis for the household expenses of the debtor and her dependents. Accordingly,
it is improper to deducted these amounts on line 17 of the means test form.
On line 42, the debtor calculated that the average monthly payment on the loan
secured by the Chevrolet Suburban is $320.67.
28.
On line 23, the debtor calculated and deducted the difference between the IRS
standard of $496 and the debtor’s average monthly payment of $320.67: $175.33.
29.
Line 22A directs the debtor to indicate the number of vehicles for which she pays the
operating expenses or for which the operating expense are included as a contribution to her
household expenses on line 8 of the means test. The debtor checked the box indicating she
pays operating for two or more vehicles.
30.
The applicable vehicle operating expense for two or more vehicles is $468.
31.
The debtor deducted $912 on line 22A of her means test form.
32.
When the improper deductions on lines 17 and 22A are eliminated from the debtor’s
means test form, the form shows the presumption of abuse arises
5The United States Trustee continues to investigate the propriety of other items on the
debtor’s means test form and may amend this motion to include those items.

[IamOld]

Good grief again - sounds like form/math problems for the $FIVE thousand you paid...I think your atty needs to get his/her act together FAST and she what he can do...and/or tell you what kind of 13 you'd be looking at...

Here's the two things on the motion to dismiss. Guess the attorney messed up some lines on the means test. Which really sucks because I paid him 5000 to file this. UGH. Yes I was thinking that too about the chapter 13 payment probably wouldn't be as much as the garnishment.

On line 17 of the means test form (“marital adjustment”), the debtor deducted $1,831
from the $12,020 current monthly income figure. The $1,831 figure consists of: $633 for
taxes; $37 for HOA dues; $588 for “husband’s mortgage payment;” and $573 for student
loans. The debtor later clarified that the $588 figure is the difference between the husband’s
monthly mortgage payment and the IRS housing standard (as shown on line 20B of the
means test form).
20.
In this case, amounts the debtor’s husband pays for the couple’s residence are paid on
a regular basis for the household expenses of the debtor and her dependents. Accordingly,
it is improper to deducted these amounts on line 17 of the means test form.
On line 42, the debtor calculated that the average monthly payment on the loan
secured by the Chevrolet Suburban is $320.67.
28.
On line 23, the debtor calculated and deducted the difference between the IRS
standard of $496 and the debtor’s average monthly payment of $320.67: $175.33.
29.
Line 22A directs the debtor to indicate the number of vehicles for which she pays the
operating expenses or for which the operating expense are included as a contribution to her
household expenses on line 8 of the means test. The debtor checked the box indicating she
pays operating for two or more vehicles.
30.
The applicable vehicle operating expense for two or more vehicles is $468.
31.
The debtor deducted $912 on line 22A of her means test form.
32.
When the improper deductions on lines 17 and 22A are eliminated from the debtor’s
means test form, the form shows the presumption of abuse arises
5The United States Trustee continues to investigate the propriety of other items on the
debtor’s means test form and may amend this motion to include those items.

[justbroke]

Two observations. First, the UST won't win under a "presumption of abuse" since they didn't file such within the 10 days. However, the UST can (and probably will) win on a "totality of circumstances" under 707(b)(3)(B). A technicality, but worth mentioning.

Yes, your attorney messed up your numbers! I would see if you could get a refund of "sum" of the fees or, should you choose to go into a Chapter 13, not charge for conversion. You do have money available and it appears to be a LOT OF DISPOSABLE INCOME! I don't know how your attorney thought that you could both claim a marital adjustment (to pay a secured debt) AND the full payment on a secured debt at the same time. Just doesn't make any sense at all, unless the attorney uses a paralegal and the paralegal messed up. Well, the attorney should have reviewed everything anyhow, so it's still his/her mess-up.

I'm sorry to read all this, but it does seem like the UST has valid cause to have your case dismissed. I think you paid WAY TOO MUCH for a Chapter 7. You could possibly get a fee review -- depending on your District. Unless you had some really intricate business related items and some tricky assets, I don't see that fee.

I had to look back at the math errors and they are just EGREGIOUS. Taking a $912 deduction for the vehicle "operating" allowance (on B22A line 22A) does not even make sense! Are you sure line 22A was $912? It should have been $512 for the South Census Region, and specifically for Atlanta. However, if you did put $912... that is WAY too much.

[kphipps34]

Yes someone really messed up! The lawyers office I believe had a paralegal enter the info. She told me yesterday that they were meeting about it today and she would get back to me. Guess what. I haven't heard from them. Looks like a lot of disposable income but really isn't as I support 8 dependents. Including my 2 parents. Long story short I was being garnished 1300 a month on a HELOC from a for kosher in 09. Guess I'm kinda screwed at this point. So if I let this case get dismissed does the company that was garnishing me have to obtain another default judgement or as soon as the stay is lifted can they start garnishment immediately? Any other way to stop a garnishment other than bankruptcy????

[justbroke]

The garnisher doesn't need a new garnishment order since the Bankruptcy only "stayed" any current legal action. The only other way to stop a garnishment is a Temporary Restraining Order (TRO) and that would be difficult unless you can prove fraud -- including, but not limited to improper service -- on the part of the garnisher.

If you REALLY have that many dependents, then it probably would be a close call, but with your parents on SSA, any income that they have that pays for something (even the electricity), offsets your expense! (Yes, even though SSA income is "protected" from creditors.) The key would be, just how much it "costs" you directly to take care of your parents, even though they have medicare and SSA insurance.

Just go back and do a Chapter 13 at least! You may be surprised at how much your DMI is.