I Hate The Means Test

[danaf]

It is freaking BS. For those of us that have 52 pay periods, and one extra payday twice a year - this stupid test puts us over the median income. What complete bullshit!

[Cali]

Hubby gets paid on the 1st and 15th, and some months there are 3 pay periods. We went to see our attorney knowing that we would probably be over the median. That didn't stop us from filing C7.

So I don't get why you think it's BS??

[magyar123]

That is the problem with weekly and bi-weekly payrolls.

[Help!]

Me too.

[diviaruba]

Six months income is six months income. You receive 1/13th of that income each bi-weekly pay period, and the semi-monthly folks receive 1/12th.

Technically speaking, wages earned and not yet received are an asset of the bankruptcy estate, unless exempted by state law or as part of your schedule of exemptions. So, even if you did only produce 12 bi-weekly paystubs for six months, some part or all of the 13th, even if not yet received, would be included in the calculations anyway.

[dragonnfly]

Its the same when you are paid bi-weekly anyways. We had to turn in 13 pay stubs. I didn't like the 13 so I gave them 14. She tried to give it back. I made her put it on the bottom of the stack. Dragonnfly

[danaf]

there are other things I hate about it too. It doesn't take into account how much is paid out for 401ks, or student loans (which aren't dischargeable), it wants current tax deductions, not an average. The entire thing is meant to screw people out of a 7. I've come to the conclusion that the best time to file is when the 6 month lookback passes tax returns & stimulus payments....like Nov/Dec timeframe.

I am under the median but if you add in the tax return and stimulus - I'm way over. I should be rolling in money according to the test. Even though I'm way under in sced I & J. And even though I know people get discharged when they don't pass the means test, it's just another issue to worry about in this process.

Cali, I hope you get your 7 (as I do for everyone else filing) but you might want to reserve your smugness until you actually get discharged.

[dragonnfly]

Some districts take your income tax return and prorate it out over the year. At least I think thats what they do....our takes into consideration your actual tax debt. They figure your actual tax liability and that is used on the means test which cuts out your tax return. Every district is different, some have had a lot of trouble with the stimulus checks and I'll bet those districts will have a higher rate of filing after the 6 months have passed. Our trustee didn't even ask about it. Another example is our lawyer knew they have a great dislike for 401k loans in our district so he left it out of the means all together. We are over the median also. I didn't get that feeling of relief that a lot of people on here talk about when we finally filed. It was more like "what are they going to pick on us about" We still aren't in the clear 100% but we are closer. Have you talked to any lawyers yet?

[epiphany]

Okay, I am confused here. Isn't the median income calculation based on gross income? Or is it net? If it's based on gross, then any tax refunds have already been accounted for and would not be considered as income?????

Can anyone answer that?

Thanks,
ep

[epiphany]

It is freaking BS. For those of us that have 52 pay periods, and one extra payday twice a year - this stupid test puts us over the median income. What complete bullshit!

Do you mean, one extra payday two months out of the year? Actually, it's an extra paycheck four months out of the year ...I'm in the same boat.

However, I don't think that it makes a difference. Even if you are paid once a month at your current rate of pay...where is the discrepancy?

Not ruling out the fact that I could be missing something.

ep

[Cali]

I don't see where I was smug towards you, I stated I didn't see how you thought it was BS? And I wasn't the only one that didn't think having extra pay periods made a difference.
If you are over median, then hopefully your schedules will help you.

ETA: And if I have to do a C13, I will do it. Either way I am happy that I am able to move on with my life.

Cali, I hope you get your 7 (as I do for everyone else filing) but you might want to reserve your smugness until you actually get discharged.

[danaf]

I really don't know if tax returns are supposed to be added in or not. Epiph - the means test does want gross so I hope your logic stands. I've heard yes, I've heard no. On the research I did through pacer of other attorneys and how they did the paperwork, I haven't seen it added in on the means but I only studied 3-4 different attorneys so who knows. Insofar as the stimulus - my mil brought up a good point last night. She said the letter she received from the IRS telling her about the check said that it did not have to be claimed as income for the 2008 tax year. So that is good. If the federal gov't isn't asking us to claim it as income then how could the trustee?

Cali - I apologize. I wasn't feeling well last nite. And actually, I made a mistake in my calculations so it turns out the extra paydays don't matter if you are under the median. But if you are under the median yet close - receiving any other money in the six month lookback will put you over and completely skew the test. And it's nervewracking because even though you could be under in your schedules, there are trustees out there that just go by the means test or at least that is what I'm hearing. Look at Helps situation.

[Help!]

Yes, the UST's job is to shoot down 7's based on the means test. In situations like ours where income has nose-dived and expenses have gone up, the means test leaves you totally screwed. You're penalized for income you no longer have, as if it's still there to repay your debt!

[laurannm]

I really don't know if tax returns are supposed to be added in or not. Epiph - the means test does want gross so I hope your logic stands. I've heard yes, I've heard no. On the research I did through pacer of other attorneys and how they did the paperwork, I haven't seen it added in on the means but I only studied 3-4 different attorneys so who knows. Insofar as the stimulus - my mil brought up a good point last night. She said the letter she received from the IRS telling her about the check said that it did not have to be claimed as income for the 2008 tax year. So that is good. If the federal gov't isn't asking us to claim it as income then how could the trustee?

Cali - I apologize. I wasn't feeling well last nite. And actually, I made a mistake in my calculations so it turns out the extra paydays don't matter if you are under the median. But if you are under the median yet close - receiving any other money in the six month lookback will put you over and completely skew the test. And it's nervewracking because even though you could be under in your schedules, there are trustees out there that just go by the means test or at least that is what I'm hearing. Look at Helps situation.

Good point on the stimulus. No case law yet in our district on how USTs are treating it, but my lawyer plans on fighting it if the UST tries to treat the stimulus as income on the means for that very reason you mention

[CindyLou]

Whether you get paid every week, every other week, every day, etc....you still make the same amount of money in 6 months. If you were to get paid once a month you would still get 1/2 of your annual pay in 6 months. If you get paid biweekly you get 1/2 of your annual income every 6 months. If you get paid every day you get 1/2 of your annual income every 6 months.

Danaf, I totally understand your frustration!!!!! It does seem like total BS when its not all turning out in your favor. I hope things improve.