chapter 7 & means testing ?

[pambysue]

I was curious regarding my chapter 7 bankruptcy. first question, if my prior 6 months income should happen to fall at or slightly over the median income for NY state (maybe $500) how would the means test come into play? Also, I am going through foreclosure and giving up the house. Would I still be allowed the priority debt to be claimed on the means test? I am behind $5300 on my mortgage (total owed $85000) (plus fees) and owe approx $9500 in back property taxes. Would those amounts possibly put me in the bracket to file chapter 7? My unsecured debt is only around $8000. It is the mortgage (which I owe about $15000 more than it is worth) and the back property taxes which would have to be paid first if the house is auctioned that are my main debts, so that would put me almost $25000 upside down. I am just wondering if they take those number if by chance you fall at or slightly over the median income. Or, if they would not count it as I am giving up the house anyway.
Sorry to sound so confused..but, you all have been SO very helpful to me!

[SinkingFast]

Here's a quick answer to the house payments being included question:

http://www.bankruptcyforum.com/showthread.php?t=8093

[pambysue]

Thanks sinking! By the way..do you know what "totality of circumstances of a debtor’s financial situation in determining abuse" means?

[SinkingFast]

Pretty much anything the US Trustee wants it to mean. There's no legal description or definition. Totality of Circumstances is just that. It's subject to the US Trustee's interpretation of the particulars in any given case.

[pambysue]

Oh I see..lol! Thanks. Have you heard of that happening very often? I am new to all this and just would like to know what I may be up against.
Thankyou again!

[FoolAndHisMoney]

Thanks sinking! By the way..do you know what "totality of circumstances of a debtor’s financial situation in determining abuse" means?

It's usually means if something happened beyond your control such as a loss of income or medical problems or divorce vs. a debtor that just gets tired of paying creditors and wants to discharge their debts but has sufficient income.

IMO they determine the totality of circumstances by how good or bad your attorney is or if you filed pro se. Some high income debtors can be granted a discharge just because they hire a good attorney while some pro se filers below their states median income will be dismissed or forced into a 13 because they have no experience to defend themselves against the US Trustee in front of a judge.

[no_it_all]

<big snip>while some pro se filers below their states median income will be dismissed or forced into a 13 because they have no experience to defend themselves against the US Trustee in front of a judge.

How can that happen if there is no presumption of abuse? Is this a urban legend or are there cases you can point me to....TIA

[coma]

How can that happen if there is no presumption of abuse? Is this a urban legend or are there cases you can point me to....TIA

My case...we filed old law, but three days under the wire, pro se. We hired an attorney when we got the motion to dismiss, and the UST forced conversion...

[no_it_all]

There was a means test calculator in the <old laws> ????? My question was <not> if anyone ever had a Chapter 7 converted to a Chapter 13. Question is if you are under the Median income, can you be forced into a Chapter 13? In addition, note that I said <under the median> and not "passed the means test" which are two entirely different things...please clarify..thanks...NIA

[coma]

There was a means test calculator in the <old laws> ????? My question was <not> if anyone ever had a Chapter 7 converted to a Chapter 13. Question is if you are under the Median income, can you be forced into a Chapter 13? In addition, note that I said <under the median> and not "passed the means test" which are two entirely different things...please clarify..thanks...NIA

I understand what you are asking about, and there wasn't a means test under the old law. We originally filed pro se, and hired a lawyer when the conversion issue came up, and she told us that in Hawaii, at least, cases filed in the last week before the deadline were being looked at with the new laws in mind. So with that in mind, that is why I relayed my experience. If you are under the median and have disposable income, then you can be forced to file a 13, though it probably will be less than five years.

[lrprn]

There was a means test calculator in the <old laws> ????? My question was <not> if anyone ever had a Chapter 7 converted to a Chapter 13. Question is if you are under the Median income, can you be forced into a Chapter 13? In addition, note that I said <under the median> and not "passed the means test" which are two entirely different things...please clarify..thanks...NIA

Yes, it is possible under very unusual circumstances to be under your state's median income level and still be forced into a Ch 13 when there is a presumption of abuse:

"If a debtor’s income falls below the state median, the court may find abuse (and thus push the debtor to complete the means test) but the creditors do not have the standing to file the motion. ... The presumption of abuse may only be rebutted by demonstrating “special circumstances that justify additional expenses or adjustments of current monthly income.”

From http://abiworld.net/bankbill/changes.html