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Chapter 7 over the median filer - what should I expect from the UST

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    Chapter 7 over the median filer - what should I expect from the UST

    Hi. I'm filing chapter 7 the first week of July. I am an over the median filer but passed the means test due to high mortgage, a higher car payment, and high monthly medical expenses. Due to the fact that my income is high, I assume I should expect that the UST will take a look at my case. What can I expect from the UST? Will they show up at my 341 meeting? Do they always push for Ch. 13? This is the one thing that has me really nervous. I didn't have any significant event that pushed me into BK, but rather poor choices, poor budgeting, and overspending over the course of a few years that ultimately did me in.

    #2
    The United States Trustee (UST) doesn't show up just because you're over-the-median. The factors are too case/debtor specific, but I can say that it's more likely that the UST will show up when you're over-the-median. A high-mortgage is not a killer (mine was over $3,750/month with arrears (and taxes) pushing is over $5,000/month). My case was somewhat different as I filed as a non-consumer, but I was 4 times the median income. In my case, the UST never showed at my 341 Meeting despite my constant worry that they would show.

    The UST will certainly review and scrutinize your bankruptcy petition.

    If the UST does send a representative it will be to question what is in the petition (on the schedules, such as income, expenses, etc). The questions would likely focus on the claimed expenses. I don't know what you means by "higher" car payment, but that's an area of attack. If the amount is over the UST's limits, which is currently (5/1/2019) at $508/month, then that would be a problem as you would only be able to claim the $508 (using the UST's test). The UST usually doesn't complain about "high" housing costs win high cost area -- California -- or for a professional who has a home commensurate with their salary. Higher medical costs could be explained. I actually switched to an HDHCP (high-deductible health care plan) specifically because paying $12K a year for healthcare WAS ridiculous. But, I also had an HSA account which I funded at $6K a year (and my employer contributed $1,100 a year).

    The expenses are the key area where the UST will poke holes into an over-the-median debtor's petition.

    The UST's job isn't just to "push" people to Chapter 13, but more to ensure that those that can afford to pay a dividend to the unsecured creditors, don't take advantage of a Chapter 7 discharge. A Chapter 13 is entirely voluntary which means you can't be forced into a Chapter 13. The UST will typically file a Motion to Dismiss, or a Motion to Dismiss or Convert, where the debtor should be able to pay a "meaningful" dividend to the unsecured creditors. The actual court order, granting the dismissal, usually gives the debtor 7-14 days to "convert" is the debtor so chooses.
    Chapter 7 (No Asset/Non-Consumer) Filed (Pro Se) 7/08 (converted from Chapter 13 - 2/10)
    Status: (Auto) Discharged and Closed! 5/10
    Visit My BKForum Blog: justbroke's Blog


    I am not an attorney. Any advice provided is not legal advice.

    Comment


      #3
      We are in the same boat. Submitted all of our worksheets to our attorney and waiting to meet to officially file. We are over median income by $25K. Our mortgage is $4100 with taxes included. Minivan lease is $510 and car payment for $385. No other toys, properties, cash stash, etc. My annual compensation took a hit due to bonus program changes so my annual income dropped approximately 20-25%. If we pass the means test and given these circumstances, can a UST reasonably try to push us out of a Chapter 7?

      Comment


        #4
        Originally posted by FrankTheTank View Post
        We are in the same boat. Submitted all of our worksheets to our attorney and waiting to meet to officially file. We are over median income by $25K. Our mortgage is $4100 with taxes included. Minivan lease is $510 and car payment for $385. No other toys, properties, cash stash, etc. My annual compensation took a hit due to bonus program changes so my annual income dropped approximately 20-25%. If we pass the means test and given these circumstances, can a UST reasonably try to push us out of a Chapter 7?
        I don't see that they can, unless your expenses say otherwise. This is why the reasons are too fact specific to guess. It will be based on what your bottom-line number for disposable monthly income (DMI) and any attacks, from the UST, on your expenses.

        The $510/month car is not going to be an issue (as it's only $8 over... and $8 shouldn't be a make/break situation).

        If your attorney is confident and is a fighter, there's no reason to panic.

        Chapter 7 (No Asset/Non-Consumer) Filed (Pro Se) 7/08 (converted from Chapter 13 - 2/10)
        Status: (Auto) Discharged and Closed! 5/10
        Visit My BKForum Blog: justbroke's Blog


        I am not an attorney. Any advice provided is not legal advice.

        Comment


          #5
          Thanks Justbroke! Very helpful. I have two cars (one is for my 16-year-old niece) but we are only factoring in my car which is $597 a month in case there is an objection to my niece's car. My monthly medical expenses bring me well into the negative for purposes of passing the means test without the second car payment of $201. My attorney said we will include the second payment but anticipate that there could be an objection to it. I don't have anything else other than my car payments, house payment, and some back taxes. The rest is all CC debt. No cash, no savings, already depleted my 401k, nothing of any value to sell. Like you, I'm just broke.

          Comment


            #6
            We really don’t have any other expenses that wouldn't be considered “normal”. I’m pretty sure we will easily be able to show that we pass the means test. My only concern is that my 2018 and 2017 tax returns show a higher income so hopefully I will be able to adequately prove that it has decreased significantly. This whole process is so stressful and exhausting and we haven’t even formally filed yet! This whole mess we have gotten in is like a bad dream and I just want to hit the reset button and move on and get back on track. My other concern is running low on extra cash now and being able to afford additional legal fees if we have to put up a fight.

            Comment


              #7
              From experience, the day I filed, the phones stopped ringing the next day. I started to answer the phone and tell them I filed... after three days nearly 0 calls per week. That alone removed the stress and worry, especially when American Express was hounding me like I stole their lunch money.

              Once you get to your 341 meeting, it gets even better. Unless you are over-the-median, the 341 meeting conclusion should lift all the weight off your shoulders as you await the discharge. A similar experience should present itself for even the over-the-median filers as you should now, at or by the 341 meeting, if there are any issues.

              Chapter 7 (No Asset/Non-Consumer) Filed (Pro Se) 7/08 (converted from Chapter 13 - 2/10)
              Status: (Auto) Discharged and Closed! 5/10
              Visit My BKForum Blog: justbroke's Blog


              I am not an attorney. Any advice provided is not legal advice.

              Comment

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