Ch. 7 Income / Means Test Questions

[alo]

So if you file on March 1, the look back for your income for six months is September to February.

- Is this the same look back for expenses?

- What if I I have only paid life insurance premium for four of those months of $55/month? Would I use the six month average of $37 or the actual $55?

- What if your salary increases in April, after 341 but before discharge? Or if you receive a bonus? My salary has gone down twice this year (but I am hopeful it will come back.) And, I noticed on the forum that a number of folks strategically time the filing date to avoid a bonus being calculated.

Thanks.

[justbroke]

- Is this the same look back for expenses?

Expenses are "current" with a lean towards the future. In other words, they are what you currently have for expenses NOW or can reasonably ascertain.

- What if I I have only paid life insurance premium for four of those months of $55/month? Would I use the six month average of $37 or the actual $55?

Remember, expenses are "actual" and "current" and lean towards the future. So it would be $55.

- What if your salary increases in April, after 341 but before discharge? Or if you receive a bonus? My salary has gone down twice this year (but I am hopeful it will come back.) And, I noticed on the forum that a number of folks strategically time the filing date to avoid a bonus being calculated.

There's no way to tell. See my response above. It is only those things that are reasonably certain. For example, a job is not a job until you have it; likewise a raise is not a raise until you actually receive it. Anything that happens after you file is generally not taken into account (accept for windfalls related to inheritance, divorce, or some other property exchanges).

[LadyInTheRed]

- Is this the same look back for expenses?

Most expenses are set by national or local standards. For other expenses, I believe you would use your current monthly payment. If the payment isn't the same each month, you would probably use the six month average. I'm not certain about this.

- What if I I have only paid life insurance premium for four of those months of $55/month? Would I use the six month average of $37 or the actual $55?

Again, I'm not certain, but I think you would use $55.

- What if your salary increases in April, after 341 but before discharge? Or if you receive a bonus? My salary has gone down twice this year (but I am hopeful it will come back.) And, I noticed on the forum that a number of folks strategically time the filing date to avoid a bonus being calculated.

The means test should still use the 6 month look back. If you know at the time you file that you will receive a raise or bonus, you would include that in your income on Schedule I which is an "Estimate of average or projected monthly income at time case filed." But, if you only hope to get a raise and bonus and they are not guaranteed, you could include a possible raise under Line 17: "Describe any increase or decrease in income reasonably anticipated to occur within the year following the filing of this document". But, whether you should do that based on a hope is something you should discuss with your attorney. If you don't include a hoped for raise or bonus on Schedule I and you get one before the 341, you wouldn't bring it up unless necessary to truthfully answer a question from the trustee. If the trustee learns of the raise or bonus and it is significant enough to allow you to fund a Chap 13, it is possible they would object to a Chap 7 discharge based on totality of circumstances. Hopefully your attorney would fight for you if you did not know at the time of filing that you would definitely get a raise.

[alo]

Thanks to you both! Very helpful.

Justbroke, you mentioned a "windfalls related to inheritance, divorce, or some other property exchanges"

I have been pre-planning BK since October. And, recently (within the month) my spouse was in an auto accident. I was not involved. He was injured, hospitalized and is home recovering. When it rains, it pours. I'm grateful he's alive.

He is not filing for BK. Just me. He may end up with a settlement. This will not be my money nor income. My name will not be on the check. And, this may not happen for a year or more.

I haven't retained an attorney for BK and will certainly tell them this information. But it you had any thoughts on how this would effect when I file, I would appreciate it.

To LITR's point, I am not sure how much $ or when or if it will be used up on his health bills.

[justbroke]

I would say that since Florida is not a community property State, and that it is not your lawsuit, then you do not need to list it on your Statement of Financial Affairs (SoFA) and you are not a beneficiary. You could probably rationalize, as well, that any payments would go to medical and therapy and there would not be anything left over anyhow.

At least I don't think the Trustee could jump into a non-debtor's place for an unliquidated and unknown claim. I believe that some Florida judges would say that the personal injury claim is "his" and not yours and is not a joint tenancy or shared claim.

[alo]

Thanks, I was hoping you would say that. I'd rather it never happened. But, any settlement should be earmarked for his recovery.

[justbroke]

Hopefully you are represented by a good attorney. While I speculated what should be the case, only an attorney familiar with your case and the recent caselaw would be able to give a better more reasoned opinion.

[alo]

Yes. Still trying to decide which of the attorneys is best for me here (based on the three consults I've had) or if I need a couple more. My guess is I will file in April or May. Any settlement will not be finalized or even begin being negotiated before then (if there even is money after the medical bills are paid.) Can't stop my process based on a possibility so I want to move ahead (hope the attorney agrees but I'll default to their advice/expertise.) Thank you!!