With a Threshold debt payment amount < 25% Can I automatically Pass the Means Test

[liboton21]

This is what I have from legal consumer online means test, will the UST find a way to put me to BK13?

Bottom Line

Based on the information you have entered so far, your monthly income of $8,510 is above the median for for 6-person households in California ($7,773), but you pass the means test because, its formula says that your expenses will leave you with no disposable income over the next five years.

Summary of your data:

Your average monthly income is $8,510 and, so far, you have expense deductions totaling $ 10,782 per month. That would leave you with $ -2,272 at the end of each month to pay into a hypothetical, five-year Chapter 13 bankruptcy plan, which would pay your unsecured creditors $ -136,290 over the next five years.

[backtoschool]

I see the $1000 a month food expense, the 401k contributions and the student loans as potential red flags.

The car payments are also a red flag.

The US trustee only has to come up with around $170 a month out of all of those expenses to kick you into a chapter 13.

It will not necessarily matter if you have receipts if the US trustee thinks that the expenses are excessive.

[debtinohio]

Thank you Phil, that is excellent advice. I'll know more tomorrow when I hear what my attorney has to say about the means test.

[Phil]

I can tell you I was in a similar situation, although not as high as income. 90k, family of 3. Single mom. Above means for my area.

I think it depends alot on your area and what is normal. I intererviewed 6 attorneys before I retained one. 3 said chapter 13 without knowing my expenses. 2 said chapter 7 and the one I hired actually ran the means test prior to telling me. He was the first to discuss totality of the circumstances. I did file for and have now completed the chapter 7.

I have a $2500 mortgage payment and a $650 auto payment (which when they divided over 60 was not as high, but I was given the allowable amount.)
We are still in the house (did not reaffirm) but did reaffirm the car.
In our area, they use the IRS guidelines as the standard, no questions asked. If your utilities or costs are more, you submit documentation (copies of past 6 months of bills) to substantiate. The attorney said that is very standard here and is not questioned if you have the documentation.

The trustee did not bat an eye at my case. (again, I think that depends on the trustee and the area), but he was very nice, didn't question anything, because the totality of the circumstances I did not have any disposable income each month. I am now discharged and closed.

You have been given alot of great information. All I can say is if you aren't 100% comfortable and trust your attorney, find another one. Any attorney who immediately says chapter 7 or chapter 13 without having your expenses is a red flag. A good attorney makes all the difference. Don't write off a chapter 7 yet, but mentally prepare you may need to do a 13.

[debtinohio]

Yeah, I talked with 2 and they both were alarmed at the income when I mentioned 7. Neither would give me enough information without running through "all the numbers" for which they wanted their retainer. I went ahead and retained one and he is now in his number crunching process. I completed the means test also so I'll compare and contrast his results.

You're right, it's already too much stress on my wife and I as it is!

[shabam]

Have you seen a few lawyers or did you retain this lawyer? Another lawyer may be able to work something out for you.

With a family of 5, I do not know if the hassle of trying to get a ch 7 is worth it. It could work out and you could end up with the debt wiped off. However, it could end up a nightmare (a lot of stress and work) and be dismissed or converted to a ch 13 anyway. You are also probably going to have to find a lawyer who is willing to pull some tricks to get the ch 7 through.

[debtinohio]

We are trying to find any avenues for the UST to object for you. Don't take it personally. That's not what the posts are about here. Bk is the time you must dot your i's and cross your t's. I undertook almost a years worth of research and looked at case after case, in courts and on pacer before filing. If the UST has any avenue to object, they are going to object. That is their job. The $1150 vehicle expense alone is grounds for dismissal. As an example, I have seen people dismissed because they put $300 as 401k contributions.

Object of Ch 7 is to reduce the number of red flags as possible. Currently I see three for you. Last person who was audited here ended handing over 2,000 pages worth of documents.

Thank you - I greatly appreciate the help. I really don't want to be bothered with 2000 pages of documents.

The cars are a 2009 Dodge Pickup ($30000 loan) and a leased car up in 12/10. At which time I'll petition to buy one < $489 a month. But yeah, my attorney doesn't seem interested in a 7 anyway. I'll concentrate my efforts on proving my expenses and getting a REALISTIC 13 payment out of this!

[shabam]

This some kind of jab?

We are trying to find any avenues for the UST to object for you. Don't take it personally. That's not what the posts are about here. Bk is a process where you must dot your i's and cross your t's. I undertook almost a years worth of research and looked at case after case, in courts and on pacer before filing. If the UST has any avenue to object, they are going to object. That is their job. The $1150 vehicle expense alone is grounds for dismissal. As an example, I have seen people dismissed because they put $300 as 401k contributions.

Object of Ch 7 is to reduce the number of red flags as possible. Currently I see three for you. Last person who was audited here ended handing over 2,000 pages worth of documents.

[debtinohio]

7 seems like more hassle than it's worth to be honest. This is my straight means test result. No 401K, No student Loan Payment, No anything else enterred.

48 Enter the amount from Line 18 (Monthly Income)
$11,061
49 Enter the amount from Line 47 (All Deductions from Income)
$ 10,763
50 Monthly disposable income (Line 48 - Line 49) $ 298
51 60-month disposable income (Line 50) x 60
Amount you could pay in a hypothetical five-year Chapter 13 plan.
$ 17,855

We do have 401K contributions of about $336/month total (been like this 1.5 years for me and 10+ years for my wife) and Student Loan Payments of $250 so I'll have to see if I can still work either in. I've heard good things about both going through in my district.

[debtinohio]

No. I was trying to understand the breakdown of your $1650 line item.

Good luck!

It went something like $1000 for food, $300 clothes, $100 Hygiene/Cosmetics/, $50 pet food, $35 drycleaning, etc.

I actually have credit card yearly statements that back this up. This is a family of 5 and I'm only trying to prove the standard deduction amount of $1632

[OhioFiler]

This some kind of jab? From 22C/A:

Food, clothing, household supplies, personal
National Standards: for 5 person households
source: U.S. Trustee, standards for cases filed on or after November 1, 2009

No. I was trying to understand the breakdown of your $1650 line item.

Good luck!

[debtinohio]

I'd like to see what "personal" includes.

This some kind of jab? From 22C/A:

Food, clothing, household supplies, personal
National Standards: for 5 person households
source: U.S. Trustee, standards for cases filed on or after November 1, 2009

[OhioFiler]

I'm at least pushing him for it, I don't have $500 music lessons, BMW 7 Series, country club memberships, etc. and with the BASICS and my court ordered child support payments it gets me in the range so why not look at it. I have basic cable and an $18 netflix subscription listed as "entertainment" the $120 for a tutor is documented as needed by the school and the ONLY activity for my kids is a $120/month cheer lesson for one of them and she's been in that for 3 years. No other outrageous stuff, the cars are above the IRS guideline payments but even if they only allowed the $489/car I'm still right there negative once everyone is in and WAY under the 25% threshold.

Now, do I want to go through the ringer with the UST audit? That is tough, it is A LOT of stress on my family so I may just choose not to bother and just do the 13.

$2400 house (-20,000 equity)
$1150 cars (yes, this is over the guidelines by $250)
$500 utils (gas, water, electric, $75 cable, sewer, garbage,phone) ( I have detailed records to back this up they are all on a budget plan and have been for 3 years)
$1650 food/clothes/personal ( I have detailed records to back this up)
$415 gas ( I have detailed records to back this up)
$140 car insurance ( I have detailed records to back this up)

6 month average take home pay is $6568 -above expenses = around $300 and I did not add anything else in there. No way $500 in utilities is high for our house in frigid O-H-I-O

I'd like to see what "personal" includes.

[debtinohio]

The bottom line is the only rule I know of. I have never heard of any 25% rule.

So the question is, do you risk it and waste time and money trying for a ch 7 or do you just go for a 13. Going for ch 7 is certainly not going to be some walk in a park. Remember, a UST can and has dismissed many cases for a 'totality of circumstances'. Nothing more needed.

The 25% is part of the means test.

But yeah, time may be better spent proving the expenses for a 0% unsecured 13.

[shabam]

The bottom line is the only rule I know of. I have never heard of any 25% rule.

So the question is, do you risk it and waste time and money trying for a ch 7 or do you just go for a 13. Going for ch 7 is certainly not going to be some walk in a park. Remember, a UST can and has dismissed many cases for a 'totality of circumstances'. Nothing more needed.