Timing of Expenses for Means Test?

[Dancer]

Hi everyone, sorry if this has been asked. I have been spending lots of time reviewing the archives but didn't see it. Obviously we're working with an attorney but I like to do my own research too.

As I understand it for the income portion of the means test, you provide 6 months prior to the filing date even if you know there is a change. I am about to stop working but we will need to include 6 months of my earnings like I am still working when we file.

But does the same logic apply for expenses? For example, because I'm working our DD is in pre-school. However, we're making the last tuition payment this month and her last day is mid June. If DH files (he is filing alone) after her last day of school, can we put that expense in our means test? Does that question make sense?

I've seen some conflicting things online about changes in income. I read that the income is as of the day of the filing but then I read that if your income changes before the plan is confirmed the increase needs to be considered. Our issue is that I will need to exercise some stock options shortly after my last day of work.

[Dancer]

Found the answer myself. Expenses are as of the time of filing per the B 6J.

[justbroke]

Actually, after the Lanning decision, expenses are current with a "forward" looking view. This helps with the "totality of circumstances" test which is typically performed in marginal cases.

(I had responded earlier, but it appears my post did not make it!)

[Dancer]

Thanks for the response. I'm researching Lanning now.

[justbroke]

I didn't intend for you to go research Lanning. I apologize. Lanning, while a Chapter 13 case, looks precisely at what is "disposable" monthly income and what the term "projected" meant in terms of the Means Test. While it was specific to how some Chapter 13 terms were used, it referenced Chapter 7 language as well.

(I am confused because you posted this in a Chapter 7 area, but mentioned the "plan". A Plan of Reorganization (a "plan") is for a Chapter 13 (9, 11 or 12) but not for a Chapter 7.)

If you have a marginal Chapter 7 case, it is always best to let income fall off if you can wait to file. In that way, you don't have any presumption of abuse issues when the Trustee looks at the "past" (because the means test looks backwards).

[Dancer]

Lanning helped actually because we have bonuses too.

It looks like we've got a marginal Chapter 7 case due to bonuses and my income. I think we would be better off waiting until I have no earnings to include. Trouble is that I don't know how long we can wait before DH has to file. There's a pending short sale on DH's house. It might close in about a month because it looks like the bank will allow it to close even without my DH signing a promissory note.

It might be best to stop the short sale because that would buy us time to wait until I've got no earnings to include.

ETA the paralegal told my DH that the bank hasn't mentioned a promissory note recently. But that doesn't make me feel better given that I know that if the bank forgives the deficiency, DH will be on the hook for the taxes. Once again I'm back to wondering how all of this short sale business is helping us at all. If he doesn't file, he's either going to owe the bank or owe the IRS. And if he has to file, what difference does a short sale versus a foreclosure make?

[justbroke]

If you are filing or have filed bankruptcy, a short sale only serves one purpose. That is to enrich the real-estate agent. Just kidding. The main purpose for you, the debtor, would be to get the property out of your name quicker. This could be important if the home is unoccupied and you're in an HOA or could potentially accumulate fines for disrepair (unkept property).

You are starting to think and strategist, and their is nothing wrong with bankruptcy pre-planning.