May Include Installment Payment in Means Test Even When Property to be Surrendered

[anonymuse]

ND Ga - Debtors May Include Installment Payments to Secured Creditors in Means Test Calculations Even If Property Will Be Surrendered

http://www.georgiabankruptcyblog.com/archives/northern-district-cases-130-nd-ga-debtors-may-include-installment-payments-to-secured-creditors-in-means-test-calculations-even-if-property-will-be-surrendered.html

[ccidiot01]

I know this is from a GA court, but do you think that this will hold true in most regions. I have a car that I plan on turning in if we decide to file, but without that debt payment our Means test only shows us with ($438) of disposable income instead of ($1224) after I take out payment, insurance and operating costs.

Thanks for any insight.

[SinkingFast]

Most probably.

With this being a New Law, all BK Court Officials and attnys are watching for Opinions to be rendered on a variety of subject areas.

Plus, it's just good common sense. If you don't intend on keeping a house or car, you shouldn't be able to include those expenses for figuring disposable income. Personal opinion speaking there.

And a rather unscientific poll of attnys,.......... We Consulted with a dozen attnys. All but one said the expenses for our house could not be included as we intended to surrender the house. Only one attny was gonna argue that he could annualize those expenses out 5 years. So that's 11 to 1 on attnys saying NO you cannot include expenses for things you intend to surrender.

[anonymuse]

But you still should be able to count some kind of rent, even if you give up the house/mortgage--you still need somewhere to live. I think that's part of where some of the reasoning is coming from.

[ccidiot01]

I guess I can see both sides of this.

On one hand you are planning to surrender the item thus freeing up income that could be used to pay other debts.

But, if you leave the debt out and this pushes one to say a Chapter 13 filing, then you would in essence be putting the expense right back into your calculations, thus defeating the purpose. At least this would be the case in our situation because we are tremendously upside down in the vehicle we intend to surrender so we would end up having to roll the negative equity in a restructuring.

Based on my many Means Test calculations we come out with negative income in every scenario: conservative estimates, realistic estimates, keeping vehicle, surrendering vehicle. So it's not a huge issue, but I'd like that negative number to be as large as possible to eliminate any doubt by the Trustee.

[SinkingFast]

But you still should be able to count some kind of rent, even if you give up the house/mortgage--you still need somewhere to live. I think that's part of where some of the reasoning is coming from.

That's what all the attnys said to us, Anon. We could use our rent. But not rent and house as we intended to surrender the house. It's like not including CC debts that you'll discharge in BK.