Questions about income and the means test

[Quiznos1]

1) Does an IRA withdrawal count as income on the means test if it’s not on regular bases, but within the 6 month look back?
2) How about unemployment and a one time severance payment?

Thanks
Quiznos1

[pinkpeanut01]

We did include IRA withdrawal as income (a one-time withdrawal that paid our attorney), we did include unemployment income, and we did NOT include severance pay. My attorney filled out the papers and was informed of all of the above. Not saying YOU should do it that way, just sharing my experience.

[justbroke]

How you would treat an IRA withdrawal can depend on the type of withdrawal. It is definitely an area where an attorney would help you. It could be distinguished by whether it is "regular" payment... so a one-time severance may not count as "current monthly income" (CMI) and unemployment, which is regular, does count for CMI. Likewise, if the IRA was a one-time withdrawal, it may not count.

The reason for an attorney specializing where you live, is that some Districts see unemployment insurance as a benefit of the Social Security Act, and therefore is not "income" (CMI) for purposes of the means test. Most District will see a single IRA distribution as not "regular" income. It's an important distinction.

[Quiznos1]

Thanks,PP1 and JB. We spoke with an attorney yesterday and he said both count as income on the means test, but only unemployment counts as income when calculateing DMI for 13. So, do I understand him correctly: looking back yes to all and looking forward yes to only unemployment?

[alo]

What about an amended tax return/refund? We are due to receive a refund for an amendment made to our 2010 tax return. It is substantial. It will be in our account for the six month look-back BUT we will be spending on exempt items such as home repair (plumbing issue) and others...
Since this was from 2010 I don't think it should count.

[tobee43]

Thanks,PP1 and JB. We spoke with an attorney yesterday and he said both count as income on the means test, but only unemployment counts as income when calculateing DMI for 13. So, do I understand him correctly: looking back yes to all and looking forward yes to only unemployment?

really??? and so you get into a 13 based on your DMI including your unemployment insurance and then it runs out and you no longer have that income???? now what??? oh, geesh, yes, now you have to convert your 13 into a 7 (providing you didn't find a job). grips me to no end!!!! we went through this when we interviewed attys, some claimed it was included other said it wasn't. the confusing situation was in florida it goes by county. we were lucky in our situation or in our county it wasn't counted thankfully, because when it did stop one of us didn't have a job and the other was working piece meal. no way could we have sustained a 13 when that money stopped.

sorry! it just GETS me about EI it really should be covered under the SS act everywhere, i think.

[justbroke]

What about an amended tax return/refund? We are due to receive a refund for an amendment made to our 2010 tax return. It is substantial. It will be in our account for the six month look-back BUT we will be spending on exempt items such as home repair (plumbing issue) and others...
Since this was from 2010 I don't think it should count.

All I can say is that this is a very good question. I would tend to lean to the theory that it was income in year for which it represents; in this case, 2010. It would be interesting of how the UST would view this if you're over-the-median and they are trying to find reasons to deny your Chapter 7 discharge.

[alo]

Yup, justbroke, this is a good one. I'll make sure to let everyone know how it is perceived by the trustee. In initial consults, the attorney didn't blink, just suggested I spend it. Both were also pegged me as a 13 based on income alone. Guess the one I hire may have a few challenges with my case. Thanks.