Question RE Martial Adjustment Expenses

[Dancer]

I've read the section on NOLO about the marital adjustment and looked through the archives here but I don't know how much scrutiny is paid to the expenses attributed to the non-filing spouse. Do trustees ever question why they are not household expenses? My DH is filing and I am not. We are borderline due to my earnings and increasing my expenses would help DH to pass the means test.

I see gym membership listed as an example on the NOLO site but would a family membership at the Y be questioned because it's family instead of individual?

If I send my DD to summer camp that costs more than $147/month, can I say that is my expense paid out of my check or will it be challenged as a household expense? It won't technically be childcare because I won't be working anymore*.

I see I can consider my credit card payments but most of my credit card expenses are for household expenses and is paid off in full monthly. Can I carve out the groceries from the credit card and say the rest is my expense? What about a family vacation that I am paying for in full?

*Am I understanding correctly that the income is backward looking (6 months average) but the expenses must be current? So in my case, my earnings are included but the childcare that was associated with the earnings must be excluded once I'm not working? That makes no sense.

[justbroke]

If the filing spouse uses the Marital Adjustments, then it is likely to be questioned. The real question is whether this is a borderline Chapter 7 and whether you are trying to "make up" adjustments to keep the case a Chapter 7. What I mean is that if the debtor and non-debtor have joint credit cards that the non-filing spouse pays, that may not work (since the hypothetical discharge should get rid of spousal joint credit).

You have to remember that there is both the Means Test and then the Income/Expense test. The Means Test is that arbitrary, backwards looking, six-month snapshot that just looks to see, quickly, if you meet the criteria. The other test, however, is the Schedule I/J income/expense test. Those schedules contain a more realistic picture of your current financial affairs.

To me, it sounds like you're trying to "re-distribute" or reallocate expenses to reduce your contributions to your filing spouse's income. In either case, there is no way to tell whether the United States Trustee (UST) will "poke" at your expenses. If you are over-the-median income (with the combined income and especially just the debtor), it may be more likely that the UST will poke, but no one has any way to tell in advance. Your expenses, as the non-filing spouse, need to be impenetrable. Merely stating that you pay the credit card bills in full, may not be enough to offset. As your speculated already, some of those expenses may be "household" expenses or expenses incurred on behalf of the debtor or the debtor's family.

If your case is this borderline, you may want to consider some consultations to see where that thin line exists (in your District).

[Dancer]

Thanks. My credit cards are in my name only.

I am trying to find expenses to offset my earnings to help DH pass the means test.

I was confused about the means test and Schedule I/J. Thanks for the clarification. So you are saying that if DH does not pass the means test, then he moves to the Income/Expense test and on the second test, they can take into consideration that I'm not employed anymore?

I see on Schedule I that it says Income as of the Filing Date. So if my last day of work is 5/30/14 and DH files the form on 6/1/14, he can put zero for my income?

[LadyInTheRed]

I see on Schedule I that it says Income as of the Filing Date. So if my last day of work is 5/30/14 and DH files the form on 6/1/14, he can put zero for my income?

Yes. Then your attorney will attempt to rebut the presumption of abuse that arises on the means test. It would be simpler if your husband can wait to file.

[justbroke]

Exactly what LITR wrote. You fight the presumption through showing the actual "current" expenses (on Schedule I/J). It is always preferable to let "old" income fall off the 6-month lookback. If it's possible to wait, then wait until your income has less affect.

[Dancer]

Thanks. Aha...something finally makes sense!

I know it's best if DH waits to file. I spoke to the paralegal yesterday and suggested holding off on the short sale so he could wait to file and she acted really surprised at the suggestion. She said the attorney was looking at all of the numbers now.

This has been very helpful. Not sure how I missed this distinction before.