Back in July 08, my wife XXXXXX and I visited 2 lawyers to get advice re bankruptcy. Both thought we would be candidates for ch 7. We decided to go with the one who was $500 cheaper b/c we're broke. Later when proceeding with the bk we were passed off to his associate and found out that he, not the atty we met with would be handling the case.
We passed the means test, so we went forward with a ch 7. OUr 341 went well, but later we found that the US trustee had a problem with our expenses. Student loans (we owe 350K in student loans) and food, if I remember correctly. We were forced to a ch 13 with a repayment of 1500 per month. I thought this was fishy, but I trusted our atty at this time. He said we had no other choice, unless we wanted to fight the trustee whch would cost in excess of 10K and we'd probably lose.....so we went ch 13. We made 3 payments and we were borrowing money to eat and fill my gas tank. We realized that there was no way that we could make it anymore.
Our income had dropped dramatically since July and we spoke to the the atty and told him we wanted to convert to a 7 again. He looked at the income and said we again passed the means test and we could make the ch 7. By this time I had done some research on bankruptcy (on this forum) and found that if we had 50% or more of business debt, that the means test does not apply...we have more than 50% business debt. I told this to the XXXX and he stated that we passed the means test and that the UST would think he "was trying to pull something". Whatever that means. I figured that it didn't matter, b/c we passed the means test anyway. We had some questions about the income that was on the schedules, it looked too high to me and XXXX said that the computer figures everything and the formulas spit those numbers out. We had a new 341 scheduled on 3/23/09 and had our fingers crossed.
On 3/23 we dropped our 6 year old son off at a neighbors house to catch the bus and we headed to the courthouse at 6 am to get from NJ to NY by 9 am. At 8:45 I called the law firm to tell them that we'd be 15 mins late...to my surprise the atty answered the phone. Turns out that the UST was dismissing the case and the 341 was cancelled. I was never notified...very professional.
The UST stated that we do not pass the means test b/c my atty had included student loans on the test and that was not permittable, and our food budget was too high. I questioned this and XXXX stated that our NET income was $8800. I said "that sounds too high" (I'm in sales and my income varies tremendously). So the atty said I should call him later from a land line (I'm sure he's sick of dealing with me and I was pissed), even though the reception on the phone was fine on my end. So we hung up.
Later that day, I received a letter from XXXX for us to sign dismissing the bk and that we would be barred from filing again for 180 days. With two options 1. refile in 180 days in NJ (and probably pay another 3000) or 2. fight the UST which would require a significant retainer.
I called XXXX and asked him to go over his definition of gross vs net. I had calculated that my GROSS income was 8800...so therefore, how can my NET be 8800? XXXX very patiently went over the numbers and realized there must be some mistake. Here's his e-mail to me:
XXX- OK, I have gone over the means test and schedules I and J. There were mistakes. The first issue is that we calculated income based upon bi-weekly, rather than bi-monthly. That increased your income. Second, the system looked at all of the checks that were entered and not just the ones that we wanted to focus on for the six month window. Accordingly, the income is LOWER. However, the means test still fails. This is because there is no longer any secured debt that may be deducted from the means test. Therefore, the presumption of abuse arises. Your I and J show a deficit budget. However, without the pass on the means test, we still have the same problem. I am attaching the revised documents for you to look at. Keep in mind that the means test DOES NOT ALLOW for a deduction for student loans. Take a look at these forms and call me and we can discuss. If you want to proceed against the UST, we can do that, but I can tell you that we will require a substantial retainer
to take on the UST.
So, now the I and J are ok but the means test fails....can I now prove the 50% business debt, or is my case ruined?
No wonder I had a hard time...even the 1st attempt at ch 7 may have succeeded b/c of the bi-weekly vs semi monthly screw up...is it possible to go back??
Is there anything that can be done? I believe that the UST needs to know that there were mistakes, but I don't believe that the atty has any intention of telling him (although in fairness I am not sure of that)
Sorry this is so long, but I am desperate to get my life back on track, hopefully w/ ch 7.
Thanks....XXX
We passed the means test, so we went forward with a ch 7. OUr 341 went well, but later we found that the US trustee had a problem with our expenses. Student loans (we owe 350K in student loans) and food, if I remember correctly. We were forced to a ch 13 with a repayment of 1500 per month. I thought this was fishy, but I trusted our atty at this time. He said we had no other choice, unless we wanted to fight the trustee whch would cost in excess of 10K and we'd probably lose.....so we went ch 13. We made 3 payments and we were borrowing money to eat and fill my gas tank. We realized that there was no way that we could make it anymore.
Our income had dropped dramatically since July and we spoke to the the atty and told him we wanted to convert to a 7 again. He looked at the income and said we again passed the means test and we could make the ch 7. By this time I had done some research on bankruptcy (on this forum) and found that if we had 50% or more of business debt, that the means test does not apply...we have more than 50% business debt. I told this to the XXXX and he stated that we passed the means test and that the UST would think he "was trying to pull something". Whatever that means. I figured that it didn't matter, b/c we passed the means test anyway. We had some questions about the income that was on the schedules, it looked too high to me and XXXX said that the computer figures everything and the formulas spit those numbers out. We had a new 341 scheduled on 3/23/09 and had our fingers crossed.
On 3/23 we dropped our 6 year old son off at a neighbors house to catch the bus and we headed to the courthouse at 6 am to get from NJ to NY by 9 am. At 8:45 I called the law firm to tell them that we'd be 15 mins late...to my surprise the atty answered the phone. Turns out that the UST was dismissing the case and the 341 was cancelled. I was never notified...very professional.
The UST stated that we do not pass the means test b/c my atty had included student loans on the test and that was not permittable, and our food budget was too high. I questioned this and XXXX stated that our NET income was $8800. I said "that sounds too high" (I'm in sales and my income varies tremendously). So the atty said I should call him later from a land line (I'm sure he's sick of dealing with me and I was pissed), even though the reception on the phone was fine on my end. So we hung up.
Later that day, I received a letter from XXXX for us to sign dismissing the bk and that we would be barred from filing again for 180 days. With two options 1. refile in 180 days in NJ (and probably pay another 3000) or 2. fight the UST which would require a significant retainer.
I called XXXX and asked him to go over his definition of gross vs net. I had calculated that my GROSS income was 8800...so therefore, how can my NET be 8800? XXXX very patiently went over the numbers and realized there must be some mistake. Here's his e-mail to me:
XXX- OK, I have gone over the means test and schedules I and J. There were mistakes. The first issue is that we calculated income based upon bi-weekly, rather than bi-monthly. That increased your income. Second, the system looked at all of the checks that were entered and not just the ones that we wanted to focus on for the six month window. Accordingly, the income is LOWER. However, the means test still fails. This is because there is no longer any secured debt that may be deducted from the means test. Therefore, the presumption of abuse arises. Your I and J show a deficit budget. However, without the pass on the means test, we still have the same problem. I am attaching the revised documents for you to look at. Keep in mind that the means test DOES NOT ALLOW for a deduction for student loans. Take a look at these forms and call me and we can discuss. If you want to proceed against the UST, we can do that, but I can tell you that we will require a substantial retainer
to take on the UST.
So, now the I and J are ok but the means test fails....can I now prove the 50% business debt, or is my case ruined?
No wonder I had a hard time...even the 1st attempt at ch 7 may have succeeded b/c of the bi-weekly vs semi monthly screw up...is it possible to go back??
Is there anything that can be done? I believe that the UST needs to know that there were mistakes, but I don't believe that the atty has any intention of telling him (although in fairness I am not sure of that)
Sorry this is so long, but I am desperate to get my life back on track, hopefully w/ ch 7.
Thanks....XXX
Bankruptcy Wizard
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