Means Test vs. Schedule "I" Expenses

[bkinfoseeker]

It looks to me that the means test is very clear cut with decent IRS "expense allowances" depending on your residence. How does the Means Test relate to Schedule "I"? I actually have less expenses on the Schedule "I" than the means test because of the standard expense allowances on the means test. Will the Schedule "I" also be used to determine if someone can pay back or not? I assume the Means Test determines if you are allowed to file based on what you can pay back in 5 years and Schedule "I" Expenses determines what you have left over each month and what you can pay in 3 years?

Other Means Test/Expense questions:
1) What exactly counts as "Telecommunication Expenses" on the Means Test? I know it allows voicemail, call waiting, cell hpone, and internet. I assume that basic phone is part of the "Household Expense Allowance." What is everything that can be claimed here? What is the purpose of this category? Telecommuters?
2) What expenses will be discredited by the trustee as an unnecessary expense even though they are reportable on the Schedule "I"? 401K Contributions, certain recreation expenses, a large car payment that will soon end because it will be paid off, etc.? I wouldn't want some expenses disallowed because the Trustee feels that they could be cut out or are not a necessity and suddenly you see the monthly net income climb to over $200 on the Schedule "I"

[FoolAndHisMoney]

The means test pretty much just limits most of your allowed expenses, but after the test your schedule I & J will still be used with your actual expenses. I too thought that phone/cable modem would count as household expenses, but I guess not.

The car and any other secured loan looks tricky. If you have payments of $350 per month and you have 3 years left when filing I think that you can only claim your payments are $210 per month. It looks like the means test wants you to calculate your total secured loan debt and divide it by 60. (350x36=12,600 divided by 60=$210). That's the impression I got anyway.

401K Contributions aren't allowed under old and new law. Under new law 401k loan payments are allowed.

It looks like higher legal fees may actually "help" someone qualify for a chapter 7. According to the form chapter 13 administrative expenses (which should include lawyers fees) is also an allowed expense. Most lawyers will charge up to 3k or more for a chapter 13 (WOW!)

Does anyone know if a home security system is considered a household expense or does this qualify as protection against family violence?

I feel that the means test will only push a small percentage into a chapter 13. When you see some cases where debtors are living in large homes and expensive cars while trying to wipe out their unsecured debts, this small percentage of filers will be the biggest losers under current law.

Anyone else familiar have any comments? Unfortunatly most of our questions won't be answered until new law filers visit us with their experience.

[StaciMM]

I can't imagine why you would not list the full car payment amount? But if its almost paid off (I'm thinking only a few payments left, but that may not be the case) I'm not sure how that will be handled.

[FoolAndHisMoney]

I can't imagine why you would not list the full car payment amount? But if its almost paid off (I'm thinking only a few payments left, but that may not be the case) I'm not sure how that will be handled.

I agree, but from what line 42 says it appears that they are looking for a 60 month average. Unless someone bought a car or took out a secured loan the day before filing the test wants the average and not the actual.

http://www.uscourts.gov/rules/Revised_Rules_and_Forms/BK_Form_B22A101105.pdf

[bkinfoseeker]

The means test pretty much just limits most of your allowed expenses, but after the test your schedule I & J will still be used with your actual expenses. I too thought that phone/cable modem would count as household expenses, but I guess not.

Well if you look at telecommunications local phone service is NOT listed only special long distance, voice mail, etc.

The car and any other secured loan looks tricky. If you have payments of $350 per month and you have 3 years left when filing I think that you can only claim your payments are $210 per month. It looks like the means test wants you to calculate your total secured loan debt and divide it by 60. (350x36=12,600 divided by 60=$210). That's the impression I got anyway.

You are exactly right for the means test. However, lets say that I have 12 months of $350. The means test allows $350*12/60 = $70. But what if after passing the means test with the $70 car payment expense I then use $350 on the Schedule "I" expenses. Will the Trustee use the new calculation and change my $350 down to $70 and possible make me uneligible based on my actual expenses?

Does anyone know if a home security system is considered a household expense or does this qualify as protection against family violence?

Probably not. I thought that at first as well but if you look closely it relates to a specific Federal Law for people protecting themselves against Demoestic Violence and things under this section must fit specifically under this law. However, this is so vague, confusing and unspecific that I am sure many people will put their security system under this section.

I feel that the means test will only push a small percentage into a chapter 13. When you see some cases where debtors are living in large homes and expensive cars while trying to wipe out their unsecured debts, this small percentage of filers will be the biggest losers under current law.

The amazing part is the vehicle expense allocation. Does not matter what you actually spend to maintain the car. It appears that I could purchase a 2nd beater car and add an additional $400 a month in expenses to the means test.

[FoolAndHisMoney]

Well if you look at telecommunications local phone service is NOT listed only special long distance, voice mail, etc.


You are exactly right for the means test. However, lets say that I have 12 months of $350. The means test allows $350*12/60 = $70. But what if after passing the means test with the $70 car payment expense I then use $350 on the Schedule "I" expenses. Will the Trustee use the new calculation and change my $350 down to $70 and possible make me uneligible based on my actual expenses?



Probably not. I thought that at first as well but if you look closely it relates to a specific Federal Law for people protecting themselves against Demoestic Violence and things under this section must fit specifically under this law. However, this is so vague, confusing and unspecific that I am sure many people will put their security system under this section.



The amazing part is the vehicle expense allocation. Does not matter what you actually spend to maintain the car. It appears that I could purchase a 2nd beater car and add an additional $400 a month in expenses to the means test.

HHHHHHHHHMMMMMMMmmmmmmmmmmmmmmm,,, not sure about this. Most or ALL states (I think) only allow you to have 1 car as an expense at least for a chapter 7. If you are filing jointly then you can have 2 cars. It allows everyone to have transportation expenses with or without a car though.

I still feel that it will allow reasonable expenses though. All these new items are simply there to make bankruptcy a last resort and not a 1st. It will force the "well off" debtor that fell on hard times to live within their means then file if they must but not hurt the "honest but unfortunate debtor".

I was notified from 3 creditors this week alone that my minimums will increase by Feb 1st 2006 as millions of debtors were probably notified too. I figure 2 to 3 months after this kicks in the sh!t will hit the fan and millions that have no hope will seek protection from the courts and we will soon enough find out how the new law works. These poor people that have no clue will get sticker shock my March, pay it for a couple of months, seek counciling, then find this helpfull forum as we all did and learn of their options. Hope I'm wrong but I doubt it.