A little frustrated and don't know what to do..

I have been thinking about something since our last meeting with our attorney that just does not seem to add up.

So my wife and I decide to file bankruptcy and go with an attorney a friend recommends. I get a variable, end of the year bonus/profit sharing check at the end of each year. It can range from 0 to 20% of my salary. In fact, in the last 5 years it has ranged from 0 to as high as about 15%.

Last year I got about a $9,000 bonus at in Dec (’08). So out attorney told us to wait to file because they look at your last 6 months income. So we wait and wait and wait. We kept fighting off creditors, had to deal with our house almost going into foreclosure – in fact we ended up selling out house in June – throughout our attorney kept telling us to wait. He said “we’ll wait until June…” but then realize we really had to wait until July for Dec ’08 to roll off.

Then, in our final meeting, after we’ve submitted and resubmitted everything several times and after we sign all of the paperwork, he says “You’re monthly payment to the trustee will be $1,560…” Which we thought was a little high, but we could manage. THEN!!! He says “…but, that’s only if they don’t look back before the previous 6 months….then they could adjust the payment higher…much higher…”

My wife and I looked at eachother and said “WHAT??? What do you mean?” and he proceeded to tell us that the trustee could look back before the last 6 months and that it could increase our payment by more than $600 PER MONTH!!! (which I’m not even sure he calculated that correctly)

Can someone tell me if this is true? Is this possible? Can they just disregard the “rules” of using your last 6 months of income and include money that, based on the current economy, might not even be there this year???

Nothing upsets a trustee a more (well a few things) than not including bonuses in your income. If you get yearly bonuses you *should* take your last bonus, or an average if you have record of what the last ones were, and include that in your income.

Trust me, I know, it sucks... my payment was $400/mo more based on quarterly bonuses that went way down right after I filed.

For the means test, you go back 6 months. To calculate your DMI for your payment you use your future earnings. Leaving it off and just saying you expect it to go down is a good way to get you in hot water.

So to make sure I understand... I would take the "bonus" amount and average it across 12 months - correct?

One other question - we get a report each month on how the bonus is looking and its already substantially lower than last year. Would that be taken into account?

The thing that bugs me is that we waited and waited, based on what our attorney was telling us, then he changes the story after everything is signed AND after he (in essence) files all the paperwork with the lower amount.

So to make sure I understand... I would take the "bonus" amount and average it across 12 months - correct?

One other question - we get a report each month on how the bonus is looking and its already substantially lower than last year. Would that be taken into account?

The thing that bugs me is that we waited and waited, based on what our attorney was telling us, then he changes the story after everything is signed AND after he (in essence) files all the paperwork with the lower amount.

Correct, if you get a $1200 yearly bonus you would add $100/mo to your monthly income(make sure you use the after tax amount on the bonus).

If the report can give an estimate of what your next bonus will be I don't see why you couldn't argue you should be able to use the lower value.

One thing you can do is try to fluff up some of your expenses and then notate that you have been informed that your bonuses are expected to go down, however, your last yearly bonus amount has been divided by 12 and added in to your income.
The trustee may be more likely to ignore $100 worth of expenses he thinks is a little high if he sees that your future income is likely to be less than you wrote down (the honesty of writing down the bonus that wasn't in the standard look back may stand out as a good thing also).