Means Test- Below Median ..but High DMI

[yepitme]

Sorry if this has been asked before but I searched and couldn't find anything. Ok so I live in Fl and the median income for a single person is about 41,000 I currently make around 28,000 now my problem is I recently got a new job about 6 months ago and after calculating my is kinda high .. ~500/month.I live in my mom's rental property and dont really have to pay rent (mainly so that I can save up and pay for a bankruptcy) My debt is ~40,000.Will they even look at my DMI considering the fact that I am so far below the median? Or will/should i just overestimate some expenses and say that I pay some bills like utilities even though they are not n my name?. possibly make an official lease between my mom and I? I plan on having my first consult this week but I just wanted to prepare myself. Thanks

[Pizza]

Numerous sources read that if your income is less than the median for your household size, the full Means Test does not apply, and there is no presumption of abuse.

[ValleYum]

Even being under median income, Schedule J and Schedule I have to show little to no DMI.

Do you have a vehicle payment? Do you pay for renter's insurance? Do you have term life insurance? Does your mother expect you to pay rent soon or to move out after you file BK?

Any of the above can reduce your DMI.

[yepitme]

Well I have heard it reported it both ways on various websites some say that if you past the first part of the means test the second doesnt matter and others say the opposite.

Even being under median income, Schedule J and Schedule I have to show little to no DMI.

Do you have a vehicle payment? Do you pay for renter's insurance? Do you have term life insurance? Does your mother expect you to pay rent soon or to move out after you file BK?

Any of the above can reduce your DMI.

I dont pay any. My mom does expect me to either move out or pay her though when my bankruptcy is complete. I mean I could start paying the utilities and such but I didnt know if that would even matter since it is not in my name. Would that matter to the trustee

[keepsmiling]

People below median wind up in 13's all the time. They get the option to do a 3 year plan instead of a 5.
Strikes me it would be safest to start paying some rent.
Say, $500 a month.
What your mom does with that money post bk is between you and her. Perhaps she could apply it to future payments. Or pay for your bk with it.

[ValleYum]

Excess DMI on Schedules I & J always matters despite being under median. Totality of circumstances and all those fun things!

[yepitme]

Thanks for the responses.. It looks like I need to adjust my DMI

[pamkev]

I thought the same way you did at first. Doesn't matter if you under they will still look to see if you have DMI so yes you need to adjust your DMI like starting to pay rent to you mom.

Pam

[TheBajan]

About the time we filed BK, my husband's step-sister consulted a few attorneys about filing. She had been unemployed for several years (in Texas), gone through a divorce, lost her home to foreclosure, and she had moved in with my father-in-law (rent-free). When she tried to file, she had found a job just a couple of months before and was trying to get a fresh start. Even though she had no assets and was way below the medium, they told her she would have to file a 13 because she basically had no bills so there was DMI available. In her case, she chose not to file and to just let the debts go unpaid.

[Tater]

I agree with others that they actually look at DMI. My husband and I were over median income in our state. After doing the proper schedules with our attorney, we found out we had no DMI. We were actually in the hole several hundred per month. We had a couple of attorneys tell us that since we were over median, then we would be an automatic Chapter 13. Once we found the right lawyer who took the time to go over our schedules, we were able to file Chapter 7 without a problem.

You are on the right track with starting the free consults. Lawyers in your area will be able to give you ideas as well as what others here suggested. Good luck and let us know how things go for you!

[btbeme]

In the twisted, crazy-straw logic of BK, having expenses (necessary ones like living expenses) can sometimes be your friend.

[Pizza]

Hmm... all bankruptcy attorneys I spoke with looked at our income, saw that it was about $5000 below median, and told me with ease that it would be a simple, straight chapter 7 without even getting into monthly expenses. As stated, numerous websites read something like this:

The first step is simple: If your current monthly income is less than the median income for a household of your size in your state, you pass. Period. You're done. You do not need to complete the rest of the means test. You can file for Chapter 7.

^ That once was straight from nolo, in fact: (http://www.nolo.com/legal-encycloped...ity-29907.html)

If that is incorrect, then there is obviously a lot of misinformation out there and the confidence levels of those attorneys I spoke to is astonishing.

At any rate, OP should be able to find an attorney that can work out the $305 DMI that would have to eliminated by analyzing expenses and allowances to successfully file a Ch.7.

[LadyInTheRed]

Hmm... all bankruptcy attorneys I spoke with looked at our income, saw that it was about $5000 below median, and told me with ease that it would be a simple, straight chapter 7 without even getting into monthly expenses. As stated, numerous websites read something like this:

The first step is simple: If your current monthly income is less than the median income for a household of your size in your state, you pass. Period. You're done. You do not need to complete the rest of the means test. You can file for Chapter 7.

If that is incorrect, then there is obviously a lot of misinformation out there and the confidence levels of those attorneys I spoke to is astonishing.

At any rate, OP should be able to find an attorney that can work out the $305 DMI that would have to eliminated by analyzing expenses and allowances to successfully file a Ch.7.

It is true that you pass the means test if your income is below median. But, even if you pass the means test, the trustee can still object to a Chap 7 discharge based on "totality of circumstances" if Schedules I/J show you have enough DMI to fund a Chap 13. Somebody whose current expenses are so low because a friend or relative has been nice enough to let them live rent free until they are back on their feet, can have problems. But, it is nothing a good attorney shouldn't be able to overcome.

[btbeme]

An attorney that tells you that you are an "easy Ch 7" without doing a little homework is...missing something. While some cases are absolutely easier than others, an attorney should do at least a brief analysis of your financial picture before suggesting anything.

The last place you want to receive a surprise is at (or just after) your 341 hearing. Better to uncover all the possible tripwires early on in the process, starting with the initial consult. The attorney I originally hired had me do about 90 minutes of "homework," filling out a questionnaire and supplying a handful of important numbers before he would even set an appointment. And, every single point he made during our initial consult was absolutely spot-on as I went through the process.

[HHM]

As has been pointed out, you CAN be below median and have DMI and get a motion to dismiss or convert from the US Trustee.

On average, if a debtor is below median, they will be a chapter 7. However, keep in mind that the means test is only ONE part of that determination. All the means test does is create a "presumption" about which chapter of BK you should file. The facts of your case will still determine where you eventually end up. (e.g. schedule I and J). So, if you are below median, but actually have $500 in DMI, the means test "presumes" you are a chapter 7, but schedule I and J and your "actual" circumstances will make it so you are a chapter 13. Same idea in reverse. If you are above median, and Part II of the means test is showing DMI, but on schedule I & J, you really have no DMI, the means test "presumes" you are a chapter 13, but your actual circumstances dictate otherwise.