Means test question

[Mike1944]

I am doing some research for my mom's situation. Putting together all of the bills.

I am thinking they will want her to go into a Chapter 13. I was wondering if they use the national standards or actual expenses if you are under the state's median income?

She is 70 years old. Social Security and Pension is about $2700 per month. If you take out all of her credit cards and unsecured loans, her bills come up to about $2350 per month. Although, right now she is in the hole by several hundred every month with the CC & loan payments. She is disabled now, so going back to work isn't an option for her. Chapter 13 wouldn't be so bad, as it would at least set up a budget that keeps her even. However, at her age and with her current health issues, chapter 7 would be a blessing.

[justbroke]

It's a very good question and it is likely that only an attorney practicing in your particular District can give you a solid and reliable answer. Social Security Income (any income from the Social Security Act) is excluded from the Means Test. Your Mom would pass the means test, meaning she does not have enough to fund a Chapter 13 based on the Means Test. However, the inquiry doesn't stop there. The question will be on the Schedule I and J. The SSA income is included on Schedule I and she would need enough offsetting expenses to get her below a certain threshold.

It could be argued, even if there is $400 leftover, that it's SSA income and that income would not be useable in a "hypothetical" Chapter 13 since it comes from SSA income.

[Mike1944]

That would be a pretty big deal in her case. SS retirement is $1500 of to the total $2700.

[justbroke]

Just know that Trustee have made a fuss over things like this. I would suggest you obtain 3-5 "free" consultations from local bankruptcy attorneys. They will be better able to tell you the temperament of the Trustee panel (pool) in Massachusetts. I find the 1st Circuit (Court of Appeals), which covers New England, is much more pro-debtor anyhow.