Presumption of Abuse and Discharge

[mbschwegel]

We filed BK Oct 26 and had our 341 meeting on Nov 29. The trustee filed a presumption of abuse on Dec 11. He has 30 days to filed for motion to dismiss or an extension. This week the trustee is asking for updates on income and bank statement. We are stressed out and wonder if this means we are going to be dismissed. We passed the means test but it is very close, we are over median income.

How often does a presumption of abuse lead to a dismissal?

[tobee43]

mbschwegel, with respect to your question how often does a presumption of abuse lead to a dismissal? it's really difficult to answer that, as it depends on what and why the trustee is questioning or why they have expressed concerns. if they have a question that cannot be fully answered to their satisfaction that can lead to a dismissal.

do you know what or why exactly the trustee is looking for? your atty should have a clue.

usually, and also depending on the situation, if you have been honest and truthful it will work out in your favor, however, unless you know what they are exactly looking for it's difficult to predict the outcome.

do your best, and again ask your atty for possible outcomes. don't usually like the "what if" scenarios, but in this case i would ask your atty, what if this or what if that.

best of luck to you! i know it's easy to say, but try your best to stay focus and not make yourself crazy about this, there is nothing that can't be fixed or as scary as this may seem it will pass. keep us posted!

[mbschwegel]

We applied for BK in May and the case was dismissed because North Carolina changed the law and does not allow surrendered property to be included in the means test. This was changed after we filed BK. So we made some changes in allowable expenses and refiled again in October. The trustee is looking for reasons to make us go Chapter 13 even though we passed the means test 6 months later.

My attorney does not know what the trustee is looking for, just the trustee is not happy that we refiled for Chapter 7. We are trying to remain positive but it is frustrating.

[tobee43]

ahhhhhh, yes actually i do understand. we also included, a surrendered property in our petition,but it was allowable. i can't understand why they wouldn't include the amount on the means test? i suppose they figure you don't have to pay it and will be saving the money and staying as long as possible for your move. unreal, especially, if your intention is to walk away from the house...will they allow you to have a rent amount??? i mean you have to pay to live somewhere?

i'm thinking, you MUST be able to have a rental or lease amount so you have a place to live, they can't expect no amount on the means test. so maybe if you went to a local realtor and get some listings to just back up the amount you put on the means test, show the trustee this is what you are going to have to pay for rent so you and your family have a roof over their heads. or does the trustee figure you should live in your car. sorry, it just is really upsetting for me, so i can imagine what you must be feeling. or, see if you can now apply for a loan modification and bring the paper work to the 341??????

[mbschwegel]

I am so involved with the BK, I forget some details. We are surrendering our former home in FL, we bought a home in NC when my husband's job transferred us to NC. The home in FL was turned into a rental. The reason we filed for BK is because of the loss on the home in FL. We are underwater on the FL home about $150K.

We are caught up in the whole mortgage mess in FL and can not figure a way out other than BK. It is so maddening!! It seems the rules change depending on the way the wind is blowing.

[tobee43]

the rental will and can be an absolute issue. as rental property you must put on your tax return, depreciation, costs, losses, gains, the whole thing. now you most likely have the trustee wanting to know about where the rental income went even if it was applied to your new place. so most likely the trustee is seeing your mortgage listed however, are you also including the income you have rec'd from it...that might be what's going on here.

i am just wondering why you didn't file florida bk as opposed to nc? had or did you live there longer than 6 months since you need to establish residency if you are filing nc? just wondering.

yes, it's a difficult situation once you start renting a house you surrendered or vacated and are claiming on a bk petition. i wish you the best and hope it all works out for you!

[mbschwegel]

We moved to NC and bought a house in 2008. The rental in FL has been vacant since April 2012 and we have had a loss every year since it began a rental. The trustee never asked any questions about the rental house. It is a very stressful week. We hope the trustee will make a decision by Jan 11 as the 30 day period is up then.

[tobee43]

well as long as you listed it, that will be good, at least it's not something the trustee's just finding out about.

[mbschwegel]

We got the trustee's motion to dismiss today. Our attorney recommended we object to several points from the trustee. The trustee did not allow any expense for telecommunications or for vehicle taxes. Also the trustee did not accept all our donations expenses even though we have receipts to prove the donations. I am wondering if we will ever finish up.

[tobee43]

sorry to hear. it is a real problem.

after a dismissal i'm sure your atty told you it's about 180 days before you can file your case again. really, maybe you are better off doing that, than fighting this trustee?

[justbroke]

We got the trustee's motion to dismiss today. Our attorney recommended we object to several points from the trustee. The trustee did not allow any expense for telecommunications or for vehicle taxes. Also the trustee did not accept all our donations expenses even though we have receipts to prove the donations. I am wondering if we will ever finish up.

The United States Trustee (UST) does not believe that your expenses are warranted. I do not know where your expenses are in your paperwork, but if they are on Form B22A (Means Test), then they typically must fit into a particular category. For example, most car maintenance, taxes, registration, other fees are included in the vehicle allwance. If you tried to double dip, the UST could question that expense.

Typically, the UST will not question donations if they are "regular" and documented. For example, most homeowners file Schedule A (Itemized Deductions) with their taxes and clearly list the donations. The UST would look back over the last 3 tax returns to see if the donations were "regular". They do not want people "pre-planning" -- as an over the median income filer -- by "starting" donations just a few months before filing so they can tax the expense. You just have to prove that you are actually doing this "regular". It reads as though they accepted "some" of the donation, but not all. This could mean that your donations are partially irregular. (For example, you tithe to church regularly, but you donated to United Way but not "regularly".)

"Extra" telecommunication expenses are difficult to get in unless you can prove it's for safety and welfare of your family OR production of income. You can typically show this quite readily. However, having 10 iPhone accounts and a $600/month cellular phone bill would not fly. It has to still be reasonable. If your telecommunication expenses are "reasonable", this could pass. I can't define reasonable since it is so subjective.

Your attorney will file an objection to the motion and list why the UST is wrong. This will go to a hearing. The judge will make the ruling on the motion.

[tobee43]

jb, my thoughts about this have to do with the trustee. if OP had the receipts for the donations and still denied them??? well, it sounds like he/she may be a bit hard nosed about their petition.

i know this, we had an extraordinary amount of donations on our tax return due to our move we ended up donating thousands and thousands of things (actually to the state itself) instead of leaving things at the house we were vacating. we submitted our receipts with our petition and although the amounts were in the high thousands and thousands, with those receipts and i don't if it was because it came from the state themselves, but we were never questioned.

you don't think it's best for them just to refile? i understand what you're saying about the telecommunication expenses and also how they are listed on the petition itself. but then again, wouldn't the trustee advise the atty to make the corrections? and, it's true the judge doesn't always agree with the UST especially if OP has receipts and backup for the items that are questionable.

[mbschwegel]

After spending two days updating the means test, schedules J and I with our attorney, we are ready to file objections with the court. Our means test the trustee objected to we were $338 below the means test, now we are $341 below the means test. The trustee is being very hard nosed and wants documentation for everything. The trustee disallowed highway and county taxes, school field trips, faith formation education and documented donations (we have donated to church for over the last 3 years). Fortunately, I have kept good records and could supply the documentation.

[pamkev]

I could see why the TT might object to school field trips as for the education one someone else on this forum had the same trouble with that you might want to search the forum and see what happened.
We had to provided documentation to some things the US TT objected to as well we provided 4 years of history and that was all it took

Pam

[ValleYum]

I would think school-sposored field trips would be considered as an educational expense. How much are you claiming for these per month?