Means test for chapter 7

[freshstart06]

In my state for a family of 6 the median income is $76,876, is this based on net income??? If they base this on net income we are under but if they base this on before taxes we are over however, I took the means test using gross income and after the allowable basic housing and living expense we are negative $1100 this is before I even include the debt. My question is do I have to do the means test because we are so negative???

We do not live beyond our means accept it looks like we may have to find a cheaper home to rent. We got into this situation due to my illness which is now better and my husband refusing to file back taxes, I had to file separate from him. The most current past three years will be filed before we file.

Also, we get Indian reservation profit sharing check twice a year, the amounts vary, this last May we got $4000 do we have to report this and is this exempt???I was told we don't have to report this because this is from Indian land and it is like a gift given to memebers.

06/19/07 will be filing this week.

[Logan]

Try this link to start:

http://www.moranlaw.net/means_test.htm

[loonzilla]

Means test is based on gross...if you are under, you can file chapter 7. If you are over, you need to complete the rest of the means test to determine abuse, which is basically determining if you still make enough money to pay in a Chapter 13 plan after allowable expenses are deducted from your income (which includes taxes).

After reading your tax post, it sound you are filing pro se. I highly recommend to hold off filing until you get some more research under your belt. AZ exemptions don't have benefits from Indian reservations listed...federal exemptions state "Klamath tribe benefits for Indians living in Oregon"...that is the only mention of tribe benefits being exempted that I found.

I would search for Best Case bankruptcy software, download the trial version and run the numbers. You'll have a better idea of how you fare with respect to the means test.

Keep on searching "Means Test" in this forum and you'll find a ton of great information. Once you have that info under your belt, send out the questions. Hold off filing until you know for sure about the extra income...not a good situation finding out such a big amount is counted toward income and your not prepared for it. It could mean the difference between a chapter 7 and 13. Welcome!!!

[freshstart06]

Thanks so much for you reply, even if I add the tribal profit sharing we are still negative. After all the tax deductions, medical and expenses. According to the means test even if I add the reservation money our disposable income is -$13,853 if I added my husbands past due taxes, if I leave out the past due taxes it is -$60. Trust me we will qualify even considering the gross is $7130 monthly we have four kids, I have type 1 diabetes which require ongoing medical expense and doctors appt. that my insurance does not cover only 80% My daughter has asthma and we have medical expense for her. Once a month at least three family members have to go to the doctor or ER espeically me because I have a lot of low blood sugar.
Note, we are negative before I started to add the debt.

[SinkingFast]

Just an FYI for you,......... When you file BK, you don't include any of the debt payments that you plan to Discharge. So the debt you plan to Discharge isn't a factor in your monthly expenses. You just calculate based on your living expenses and any debts (mortgage, car payments) that you intend to keep.

[freshstart06]

trust me I am not including any debts that will be discharge. What we see on paper opposed the the actual take home pay after taxes, medical, garnishment for student loans, etc is is a huge difference. Trust me, I don't even have a very high credit card bills. We just go so behind during the years of all my eye surgeries and now both of my feet are broke and I can't work. But again, this is before the debt is added. Remember we are a family of six and we are allowed more expenses.

[jal1129]

You have another thread along these same lines and this issue is addressed there, but please remember you have to use GROSS income for the means test, not net.

[freshstart06]

I hope this does not come across as rude or load, but I just don't want anyone else telling me this...

I USED MY GROSS INCOME!!!!! I WAS STILL NEGATIVE.

sorry but I had to say it like that because you guys don't understand that I did that and I did not include my debt yet when the negative showed up.

[BKTango]

I hope this does not come across as rude or load, but I just don't want anyone else telling me this...

I USED MY GROSS INCOME!!!!! I WAS STILL NEGATIVE.

sorry but I had to say it like that because you guys don't understand that I did that and I did not include my debt yet when the negative showed up.

Okay, with your husband's gross income of $6800 a month, would you mind listing your actual expenses that you do pay monthly. Not including any of the debt that would be discharged. You actual expenese. Maybe then it might help us see what you are seeing. Then we can understand you and help you a little more.

No rudeness was taken by me, help us understand so we can offer help to you.

[freshstart06]

I posted this on another thread. This is the actual numbers that I got off my husbands paystubs.

Since the means test is broken down based on monthly

Husband income: 6620
mysef: 344 (broke commission check into 12 months)
Total gross: $6984
Arizona allowed expense which include additional childcare and medcial: $6669
other allowance car payment for 2 cars, on going medical: $776
over due taxes from 1991-2002: $201 monthly
Total deductions: $7900

Subtract gross from allowed deductions: -319

now if you want to add our debts after all of this: $40,000

I will not be working for a whild so I can wait for 2 more months and then we can used my income. If you guys feel that is it best to wait let me know. we did get a summons to answer but that takes a while and we did answer. Please just let me know.

thanks for your help.

[freshstart06]

I was told we don't have to include the indian reservation profit sharing. If we have to include the income tax return I would rather wait another month so it will not be included within the 6 months

[BKTango]

That's a whole lot of allowables. I live in one of the most debtor friendly states and we didn't even get that much. That's over $6500 of allowed expense just in the 1 category, and are you claiming cars and medical twice?

If the taxes will be discharged in the bankruptcy, don't include them when figuring your monthly expenses, only do that if they will not be discharged. Usually following some other guidelines and requirememnts, personal income taxes over 3 yrs old are dischargable.

In doing your bk you will have to fill out schedules I and J which is your income versus expense forms. In some cases as has happened to many on this board if in the means tests you show a negative it still comes down to your schedules, and if you show disposable income there, you will not be able to file chaper 7, since you are already over the median this is where you want to make sure all of your ducks are in a row. It will come down to your schedules and your actual living expenses.

Here's schedule I http://www.uscourts.gov/rules/BK_For...06_revised.pdf

Here's schedule J
http://www.uscourts.gov/rules/BK_For...rm_6J_1006.pdf

You might want to print those off and do some number crunching and use your actual expenses. Not the allowables. Do it both ways. Some districts and trustees let folks get by just using the allowables, some want a down to the wire, accurate, what you really spend a month figure. It just depends on your district and how thorough they want to be. But I would think, with being over the median, and those kind of expenses a trustee will want to go through that thoroughly.

Here's an example of monthly expenses you may have

Mortgage/Rent
Property taxes/Home Insurance monthly
Utilities
Phones/Cell
Sewer/water/trash
Cable
Internet
Car
Car Insurance
Car yearly costs (inspections,tags, maintance) divided by 12
Home Maintance Monthly
School costs
Daycare
Insurance
Out of pocket medical (include over the counter medicine)
Food
Clothing
Miscellanious costs (pets, check reorder, stamps, etc.)
Recreation
Personal Care (laundry, toiletries)

Look thorugh your past bill statements, your checkbook, see what you really spend a month on necessitites. Because you have alot of income and alot of expenses. Please make sure you found out form reliable sources about the tribal profit sharing, if it doesn't need to be included then that's great, you shouldn't have to include this past tax refund, however you will have to provide the trustee with at least 2 yrs copies of them. You can probably expect this next refund to be smaller as the trustee will likely hold your case open and claim a part if this years tax refund as an asset since we are already almost half way through the year. Unless you can exempt it.

[freshstart06]

Wow, thank you so much. I used legalconsumer.com it does all the state allowence for you. You just input the numbers. I just wonder why they base you income on your net when by the time you recieve your check and the taxes and other is taken out you don't even see the gross, You see what you could have had. If they look at our previous tax years they will see we were well under the median, so I invite them to ask for previous if it helps our case. Arizona has a very high chapter 7 turnout. Homes are foreclosing left and right. If they take the income tax that is okay because once the debt clears and I can start working again life will be better for us.

Our rent is what is killing us. We have to move anyway and hopefully we will find a much cheaper home.

[freshstart06]

OH, I am only claiming medical and cars once. Remember we are a household of 6 so maybe that is why our allowed expenses are high. I know it is hard to believe but this is what it is. I am glad I did it because I was wondering where all the money went. the CCC that was required to take before you file was interesting as well and they told us that things were bad. But as stated before, our main highest expense is our rental, it is $2000 a month

[freshstart06]

I do want to make sure if we file this month do we account for paystubs from January through June??? or December through May??? I wnt to make sure I use the correct paystubs, it will not change too much.