Can I accept money from a relative?

[forgotten]

Isn't that artificially inflating income? Wouldn't that assume their parents would give them $2000 every 6 months?

I'm so confused.

Yes, but that is how your Currently Monthly Income is calculated for the means test. Under 1325(b)(1)(B), a singular, one time disbursement is “income” for purposes of determining Current Monthly Income (CMI).

If you were unemployed with no income but won $60k playing the lottery last week your CMI would be $120k/year. Even if, as you said, it would assume you are going to win the lottery every 6 months.

[SleeplessMI]

My lawyer is having me treat cash gifts over $100 as one-time occurrences but wants me to document all of them. He cautioned me against accepting them on any kind of regular basis that could be construed as recurring monthly income, though.

And yes, gifts aren't taxable, but they count on the means test. Seems unfair (stricter than the IRS, sheesh), but it's designed to get all of the debtor's income sources out in the open.

Forgotten, I'm not following you. The means test only looks back six months, so wouldn't yearly income be irrelevant?

[forgotten]

Forgotten, I'm not following you. The means test only looks back six months, so wouldn't yearly income be irrelevant?

Yes, it looks back 6 months. Your CMI is calculated using your average monthly income for the six calender months prior to filing x 12 to determine for Annualized CMI to compare to the median family income for your state.

If you made $35k in the past 6 months your average monthly income would be $5833 and some change placing your annual income at $70k.

Edit: The annual income is important for seeing if you are above or below the median income.

[JEM]

My lawyer is having me treat cash gifts over $100 as one-time occurrences but wants me to document all of them. He cautioned me against accepting them on any kind of regular basis that could be construed as recurring monthly income, though.

And yes, gifts aren't taxable, but they count on the means test. Seems unfair (stricter than the IRS, sheesh), but it's designed to get all of the debtor's income sources out in the open.

Forgotten, I'm not following you. The means test only looks back six months, so wouldn't yearly income be irrelevant?

So your lawyer would have you count say a $100 birthday gift (cash) from a relative as income?

Wow. This is all totally totally different then the 3 attorney's I've spoke with have told me.

[SleeplessMI]

JEM, yes, I'd be expected to disclose cash gifts over $100.

Some of this might be district specific based on what my attorney knows our trustees will be interested in and what they will let slide.

[JEM]

JEM, yes, I'd be expected to disclose cash gifts over $100.

Some of this might be district specific based on what my attorney knows our trustees will be interested in and what they will let slide.

What state are you in?

I guess I shouldn't worry if the 3 attorney's I've spoke with have said birthday (cash) gifts, or Christmas cash gifts etc...aren't income. But wow. Still a little cautious I guess.

[SleeplessMI]

I'm in MI-chigan.

Are you really so close to the line that you're worried about being thrown into a Chapter 13 over a $100 Christmas gift? If you aren't, stop worrying right now!

[forgotten]

So your lawyer would have you count say a $100 birthday gift (cash) from a relative as income?

Wow. This is all totally totally different then the 3 attorney's I've spoke with have told me.

Letter of the law and practice are different things. Lets say Aunt Sue gives you $100 for your birthday.

Honestly... no one is going to care... your attorney isn't going to want to bother writing it down, if the trutsee found out he wouldn't really care either. Everyone knows you have a valid reasoning on why you don't consider that income and the amount is too small to worry about.

Now, lets say Aunt Sue gives you $2000 for your birthday. The amount is getting more interesting. If you didn't put this down and the trustee questioned your $2000 deposit they may want you to ammend everything, its enough money to "worry about". At this point it is unlikely anyone is going to try and call fraud on you or throw your case out. It was still a gift after all, and you didn't really consider it "income".

Now, if Aunt Sue gave you $10,000... that is a lot of money... more than most people word consider a token gift. If you avoided marking this down as income it looks more like you were intentionally trying to hide it.

All 3 should have been income, but your attoney isn't going to be asking if $10 was stuffed in your birthday card so he can write it down.

[JEM]

I'm in MI-chigan.

Are you really so close to the line that you're worried about being thrown into a Chapter 13 over a $100 Christmas gift? If you aren't, stop worrying right now!

Ha! I guess I should have paid better attention to your screen name.

Right NOW, we are close. VERY close. My husband got a $1000 referral bonus in Sept (definitely a ONE TIME thing). Up until Nov, I was working a PT job (they decided they didn't need someone with my availability anymore and basically let me go), so we have some one time things on our income that we are waiting for them to "drop off". But I'd hate to have to wait longer for the the Christmas money my mom gave us (a few hundred for all 4 of us) and the $100 my mom gave me in Jan. for my birthday, to fall off too.

Oh, and hubby's VA disability went DOWN starting in January, so each month we wait......it's better for us. But adding in gifts for holidays and birthdays seem like we'd have to wait even longer.

[JEM]

Letter of the law and practice are different things. Lets say Aunt Sue gives you $100 for your birthday.

Honestly... no one is going to care... your attorney isn't going to want to bother writing it down, if the trutsee found out he wouldn't really care either. Everyone knows you have a valid reasoning on why you don't consider that income and the amount is too small to worry about.

Now, lets say Aunt Sue gives you $2000 for your birthday. The amount is getting more interesting. If you didn't put this down and the trustee questioned your $2000 deposit they may want you to ammend everything, its enough money to "worry about". At this point it is unlikely anyone is going to try and call fraud on you or throw your case out. It was still a gift after all, and you didn't really consider it "income".

Now, if Aunt Sue gave you $10,000... that is a lot of money... more than most people word consider a token gift. If you avoided marking this down as income it looks more like you were intentionally trying to hide it.

All 3 should have been income, but your attoney isn't going to be asking if $10 was stuffed in your birthday card so he can write it down.

Ok. That makes sense.

I asked around Christmas about money my mom was sending all 4 of us for gifts. I had pretty much put away the fear that it was "income".

We have ended up being very close to the median for our area. Teetering right over/under depending on my husbands OT. Until a few things fall off the 6 month look back, it'll probably stay that way.

[dakota112]

The only way safe out of this quagmire is to figure out what you will need to survive on for the 6 months before you file CH7, than get the cash from your family or whoever on the 7th month before you file and use it all up to live on so its gone before you file. You have to plan it out. Planning the BK is allowed and legal. These laws are really nonsense but you are forced to play this game, so play it.

[Clouddancer]

Ok. That makes sense.

I asked around Christmas about money my mom was sending all 4 of us for gifts. I had pretty much put away the fear that it was "income".

We have ended up being very close to the median for our area. Teetering right over/under depending on my husbands OT. Until a few things fall off the 6 month look back, it'll probably stay that way.

I was advised in my district that gifts aren't income.

[ryan]

So, say I received a 10K gift in January from a relative (which I did) ....is that considered INCOME as in regular income or a gift (which it actually was)?

Does it even matter for purposes of the median income test over the last 6 months?

[miindebt]

Why wouldn't someone who wanted to receive money from a relative be able to call it a "loan" (draw up some simple paperwork) and then, even if it was a gift, discharge it in the bk (for the purpose of calling it a loan and not income)?

[forgotten]

Why wouldn't someone who wanted to receive money from a relative be able to call it a "loan" (draw up some simple paperwork) and then, even if it was a gift, discharge it in the bk (for the purpose of calling it a loan and not income)?

They could. Anyone can commit bankruptcy fraud. You can also have the relative pay you in cash and you can stash it under the matress, you could place that money along with your other million dollars in your offshore numbered bank account and not mention that money either.