Question for Means Test

[BKinGA]

Hello All,

Im counting down the days in the 60 day club towards discharge of my Chapter 7, but now I have a question related to my daughter.

She has already moved out of her house because she cannot afford it any longer (ARM loan - underwater and tried to sell but no luck) and is now renting an apartment. (She moved last month).

She does want to file for bankruptcy, and so the question re the means test is even though she has moved into the rental, would she still include her monthly payment on her first and second mortgage? Her rent is $800 vs a `1400 mortgage payment. (Foreclosure hasnt occurred yet, but they will start advertising shortly).

Thanks for your response.

[Tromploi]

Means test/schedule J is estimating the FUTURE 12 months, not prior. Would seem if she is paying rent she is no longer paying a mortgage, so she could not include it.

[BKinGA]

That certainly is a good point, any other comments?

[laurannm]

Means test/schedule J is estimating the FUTURE 12 months, not prior. Would seem if she is paying rent she is no longer paying a mortgage, so she could not include it.

This is not correct. The means test looks at the 6 months prior to your filing. Whether or not you can include a mortgage on a house you are surrendering on the means test has been a hot button issue and several districts have ruled on it. Some have ruled that you can, others have said that you cannot. Are you working with a lawyer? He/she can probably best answer how it is handled in your district.

[BKinGA]

When I filed for Chapter 7 I used my mortgage payment on the means test but I had not moved yet. (my daughter has)

Any other comments if already moved and now renting?

[optimistic1]

When calculating the means test, your income would be for the last 6 months, however, you need to enter in what you are currently paying on now. As, the trustee will be looking closely at not just the means test, but your Schedule J. Schedule J is forward looking, and that means that you would enter in the amount of rent on that line for rent/mortgage expenses. He would then make a determination based on the Schedule J to see if she actually qualifies for a 7, or if it needs to be a 13.

The trustee just doesnt look at the means test and nothing else, their have been plenty of people that qualified for a 7 based on the means test, and then, their schedule J actually shows that they could pay into a 13, and they ended up doing just that.

In your case it made sense, you hadnt moved yet, so the trustee probably looked at your schedule J and it had your mortgage on it before you moved, and thus, you passed. In her case, she already left, and basically is paying less now per month, to try and fib on the paperwork saying that she is still paying the mortgage just wouldnt work.

[BKinGA]

Thanks for all of your comments.

And as to the last comment, dont worry there wont be any "fibbing" going on, I just wanted to make sure that if and when my daughter files, that she does it right.

I will let my daughter know that she should use her rent amount on the means test.

Thanks again, and still counting down my days :-)