means test clarification

[nazstar]

So, I'm a bit confused and may have made some assumptions that were wrong. I thought:

#1 If you passed the means test and were below the median income, you could file for 7.

#2 If you didn't pass the means test you need to complete schedules I and J, and if there is more than $100 in disposable income, it is taken as a given that you have disposable income to pay back a 13.

#3 The means test takes the last 6 months of income into consideration. As a result, I've been waiting for our income to drop to qualify for a 7. (We are one income family at the end of this month).

Our last 6 months of income is over the median (WAAAAAY over). But, in 30 days, our schedules I and J will show a negative of about $300 a month. Sooooo, do I have to wait the full 6 months? Or is my lawyer just preferring to try to wait it out the 6 months to make it easier for him? Obviously, if I can file sooner rather than later, that's what I would like to do. No credit card activity for 6 months, no preferential payments made to family in 12 months.

Going forward, my husband's overtime will make up the difference but for 6 months we will be struggling to stay below the median and make ends meet on necessary living expenses. The quicker we file, the quicker we can get back to normal.

[MomIcantFindmy]

I need this answer too as we are in the same boat.

[kl030505]

disclaimer, I am not an attorney.

I do believe they prefer if you are under the median income because it is easier for them. However, if you pass a means test, and it sounds like you do, though I would try not to be negative... I think you can still qualify, but it's dicier. Remember, if you get dismissed, you can't refile again for a while.

HOWEVER, there was a significant drop in income because of job loss, right? I would think that would signal that the means test is not an abuse.

I think, I would talk with your attorney, that's what you are paying him for, right? I would definitely do whatever he suggests - if you trust him- since he knows the laws, trustee tendencies and particulars of your case and we do not. I would ask him specifically why he wants you to wait and go over the pros and cons of doing so. I have met with our attorney a few times to get some reassurance and double check things and I email them once every few weeks with a new paranoid question. I'm gonna have to bake some cookies for him and the paralegal when this is all done ;)

I *think* you would probably pass, based on what I know, but I don't really know a whole lot...

HOnestly, I have the opposite problem, we are fine and fall below the median for the past 6 months no problem, but our I &J had to be manipulated a bit to make sure we aren't coming out too far ahead (because, well, we kinda are now that income has increased). I don't know who is in a better position. I'll tell you after my 341 LOL.

[nazstar]

disclaimer, I am not an attorney.

I do believe they prefer if you are under the median income because it is easier for them. However, if you pass a means test, and it sounds like you do, though I would try not to be negative... I think you can still qualify, but it's dicier. Remember, if you get dismissed, you can't refile again for a while.

I must need more coffee because I'm just not getting this. I don't pass the means test now. And why would being negative on the I and J get me dismissed? It is just what it is - my income and expenses. No fudging - just the numbers and all receipts to back it up.

Sorry if I'm being dense. I'm operating on very little sleep today!!

[kl030505]

Ok, the MEANS test is something different than the median income. If you don't fall below the median, then you have to do the means test. If you do not pass the means test and you do not fall below the median you can not file a 7 (as far as I understand).

Did you actually fill out the means test, or are you thinking the median and means test is the same thing (that's what I *thought* you were saying, but maybe I need coffee too!)

You don't want I and J to be negative because then the trustee may wonder how you will prevent this from happening again, it doesn't show a good faith effort to cut costs and try repaying creditors, etc. KWIM?

But, if you do not pass the true means test, which is something specific BEYOND the median income level (I don't know exactly what it is because we didn't have to deal with it), then you can not file a 7. I'm 99.9% sure you have to pass the means test OR have an income below the median in order to file a 7.

[kl030505]

This thread has a link with the means test in it.

http://www.bkforum.com/showthread.php?t=9183

[tay666]

So, I'm a bit confused and may have made some assumptions that were wrong. I thought:

#1 If you passed the means test and were below the median income, you could file for 7.

Somewhat correct.
If you are below the median income, you do not have to take the means test.

#2 If you didn't pass the means test you need to complete schedules I and J, and if there is more than $100 in disposable income, it is taken as a given that you have disposable income to pay back a 13.

IF you are above the median income then you need to take the means test.
If you pass the means test, then you can file a CH7.
If not, you will have to do a CH13.


#3 The means test takes the last 6 months of income into consideration. As a result, I've been waiting for our income to drop to qualify for a 7. (We are one income family at the end of this month).

Our last 6 months of income is over the median (WAAAAAY over). But, in 30 days, our schedules I and J will show a negative of about $300 a month. Sooooo, do I have to wait the full 6 months? Or is my lawyer just preferring to try to wait it out the 6 months to make it easier for him? Obviously, if I can file sooner rather than later, that's what I would like to do.[/QUOTE]
If your last 6 months income is over the median, then you have to take the means test.
What does the means test say with only one month of lower earnings?
Sounds to me like you were way over. And that it is going to take some time to get your 6 month lookback down to a point where you can pass the means test.
I think you lawyer is advising you to do what you need to to get into a CH7.

It might help if you stated what your state, family size, and current and projected income is.
Someone might be able to help you determine if you have to wait the whole 6 months, or if 4 or 5 months might be sufficient.
But realistically the lower the total is on the 6 month look-back, the better your odds are.

[nazstar]

Thank you for the clarification.

-We are in Florida.
-Family of 3 (soon to be 4 in June)
-Husband's income is really close to the median. BUT....
-My income throws us WAY over (I gross $7500 a month).
-I am collecting a bonus in 2 weeks that will be computed as income. That bonus will be anywhere from $30,000-35,000.

Given all that, I think we will be waiting a full 6 months from bonus payout! Essentially, we are soooo close that I would have to wait until ALL my earnings dropped off the 6 month radar.

-After I quit, we project that our income will be below the median and we will pass the means test without a problem.

[no_it_all]

-My income throws us WAY over (I gross $7500 a month).
-I am collecting a bonus in 2 weeks that will be computed as income. That bonus will be anywhere from $30,000-35,000.

Can you go Chapter 7 while knocking down 150K a year??? That is a lot of chi-ching..

[nazstar]

Can you go Chapter 7 while knocking down 150K a year??? That is a lot of chi-ching..

No, you can't. The lawyer didn't even blink when he told me that. Between me and my husband, we make over $200K a year - 2/3 of it being me. That's why I'm quitting. The minute they see my salary, we'll be in a 60 month payment plan. If we had no children and I wasn't pregnant, I would go that route. But one of us needs to stay home with the kids so it kills 2 birds with one stone.

[MOMof3]

I know I've told you this before *but* our lawyer used my FUTURE Baby Expense in our calculations on means test---granted, we were pushed into 13 anyway to save the house, but definitely ended up w/a MUCH lower payment. I don't think you probably need to wait because you will either have to quit, or fork out probably 1200-1400 per month for daycare expenses...where would that put you in your means test calculations? There is a place for special circumstances & our trustee didn't blink over my $800/per month daycare costs + $300 per month other added costs for our daughter that was born 2 months after filing & 4 days before confirmation!!