Questions about the means test.......

[loser104]

Have some questions when it comes to filling out the means test, posted it over in another section, but I think this might be the best spot for it, since there are a lot of very smart do-it-yourself'ers here. Don't really see where entertainment expenses, haircuts, laundry expenses, dry cleaning, and student loans fit on there. I understand that student loans are not taken into consideration on the means test, but do the other above expenses figure into the test, or do they just go onto one of the schedules? What about these (for a single person in michigan):


20A - Non mortgage expenses of $431.00 - can I take the maximum like it shows in the default, or must it be calculated out as my ACTUAL expenses

20B - Mortgage/Rent Expense of $1014 - can I take the max. here like it shows in the default, or must this one be what my apartment rent is going to actually be? What if I don't have a place to live at this time? What do I use then?

23 - Ownership costs of a vehicle $489 - can I use this default figure or do I have to use my actual car payment of $125/month (plus insurance or is the insurance calculated in the vehicle operation expense

39 - Additional food and clothing expense - it states that it should not exceed 5% of the standard allowance, so does that mean 5% of $517 for a single person which equals $25.85

[loser104]

Oh, and one more thing. If I prepay 6-12 months worth of rent when I do finally move into an apartment, do I still treat 20B the same and take the $1014 allowance???

[loser104]

Also, as far as additional food and clothing goes. I tend to spend about $200/week on food, cleaning supplies, and pet food/supplies. This far exceeds the allowable amount of $517 for a single person in michigan according to the national expense standards on line 19A.

I know that's alot, but will I be able to add that somewhere in the means test, or just on one of the schedules? Will that amount raise a red flag when the trustee sees that during the 341? I tend to eat good and eat healthy, and it's NOT cheap to do so, but I refuse to cut corners on my health and food...............unless of course this is going to be a problem during a ch.7 filing.

[tigergem]

I didn't have to take the means test, so I can't help you too much with these questions. I think you have to use the IRS standards for the means test, but the budget is completely different. My grocery expense in my budget was more than double the means allowance, and the trustee didn't question it.

[loser104]

Hey thanks tigergem, so I HAVE to use the standards??? I would welcome that idea, because they allow so much more for rental expense (apartment), something like $1014, whereas my actual rent is going to be about $5-600. I don't quite get why they would allow so much more when calculation the means test.

BUT, when filing out your schedules, you must put ACTUAL rental expenses, which would reduce your deductions/expenses. So then what? Does the trustee then not allow the conclusion drawn from the means test? "Oh sorry, the means test states that you quality for a ch.7, but your schedules tell a different story........."

Or do you just offset that expense by increasing you monthly food expense, entertainment expense (which isn't part of the means test), haircut expense, etc.............

[tigergem]

No, I don't think they can disqualify you if your means test tells a different story than your budget schedule. Means is means. That is their own self determined standard of qualification, right? So I would guess that they have to abide by it. But I'm a little out of my league on this particular question. Like I said, I didn't even have to submit the means test because my income was below the median. So I really hope that somebody who knows a little more about the means test will chime in here on your thread.

[tigergem]

Oh, sorry, for the last part of your question. Yes, I am pretty sure that you will find you have to adjust parts of your budget to allow for expense categories that aren't indicated.

[justbroke]

I see that tiger is answering your questions. I'm in Chicago right now so am away from my computer for the next 2 days or so.

[tigergem]

I was reading here: http://www.legalconsumer.com/bankruptcy/means-test/# that there are certain situations where Chapter 7 has been denied for various situations even though the means test seemed to indicate no presumption of abuse, but they don't seem to apply to the situation you described. And I would like to think those situations are probably more unusual than not.

For example, in one case they looked back a lot further than 6 months on the guy's income and what he spent it on (which would just make me mad!), and in another case, the debtor was just about to receive a substantial raise.

[justbroke]

Those cases are "abuse" cases. If you ran up your credit on the "eve of bankruptcy", knowing you couldn't afford the things you're buying and planning on bankruptcy, that's an abuse. Now, does the UST always find these cases? No. Generally if you're under median and under a reasonable amount in unsecured debt ($100K or less), you probably won't receive the scrutiny.

It also matter on the lookback if you intentionally become unemployed or underemployed in order to file Bankruptcy. They can think of that as bad faith. However, the chances of them actually catching you are small. You don't want to get caught though, because enforcement can including everything from a simple dismissal with prejudice, to criminal charges for fraud to never being able to discharge any debt that occurred prior to that filing, ever.