Too Much Disposable Income

[wolverine]

Can someone who easily meets the means test file for Chapter 7 when the following expenses are listed in Schedule J:

Granddaughter's Monthly Rent: $560.00
Granddaughter's Utilities: $200
Granddaughter's Groceries/Misc Expenses: $280

This person truly does provide this much support to his granddaughter, as the mother is unable to. He is planning on claiming the granddaughter as a dependent on his 2009 taxes but has not done so in the past.

I am thinking the answer is no, but I just wanted a second opinion.

[music12]

i don't know what the answer is. it may depend on the circumstances.

my first question is why is the granddaughter living on her own if she cannot pay the rent? and, how old is the granddaughter?

[wolverine]

She is 22 years old, which would not normally qualify her for a being a dependent but for the fact that she relies entirely upon her grandfather for support. In addition, the schedule I income for this particular person, who wishes to file for Chapter 7, is comprised entirely of Unemployment and Social Security, totaling more than $5,500/month for him and his wife.

[music12]

since SS income is exempt, and unemployment is both temporary and in some circuits also exempt, why are they filing? no creditor can collect on this income, so there is no practical reason to file. they should just make sure their bank is fully aware that all the money in their accounts is exempt so it won't get levied upon.

[wolverine]

My understanding was that Unemployment and Social Security are both considered income for purposes of Schedule I - Current Monthly Income. However, Social Security is considered a benefit for purposes of Form 22A - Means Test and thus is exempt there.

[music12]

yes, there is a lot of confusion about the means test vs. current monthly income. still, i doubt that anyone all of whose income is exempt could be pushed into a ch.13.

unemployment may also be treated as exempt on the means test, but there is some controversy about that - different circuits decided different things, and until the supreme court gets to it or the legislature clarifies it, nobody is going to know.

[wolverine]

In Michigan, I was pretty sure that unemployment is income for both the Means Test and Schedule I. At any rate, the problem was with having too much disposable income, Schedule I as compared to Schedule J, and regardless of whether you consider unemployment a social security benefit under the Act, it still would be disclosed on Schedule I. That is my understanding anyways.

[ApresMoi]

x

[newbie2]

I am in Michigan and I can tell you what happened to us: We routinely paid for medication for my mother in law that her Medicaid didn't cover fully and she lived in our home. (She was on kidney dialysis 3 times a week and SS didn't even begin to cover her expenses) We also paid for all of her food, and any clothing that she needed.

It was all stricken from our list of legitimate expenses. Every bit of it. Trustee said "She gets SS and Medicaid. That's enough."

Be fully prepared to justify the outgoing income to the granddaughter. Good luck.

[music12]

OMG. this is an inhumane country, or at least an inhumane trustee.

[klandsb]

In my situation I was able to claim some daycare expenses for my grandson who does not live with me. At the 341 my lawyer brought up the expense and the trustee wanted to know what the circumstances were and I explained and it was approved. Like I said in prev post its not the run of the mill because I feel like it expense but I dont want to go into that. ALso, my original petition was filed without this expenses so the plan had to be amended after the 341 and the permission of the trustee to include it. I would just say be prepared to show receipts, cancelled ck's ect to prove your case.. If its legit you probally have a 50/50 chance of getting some or all of it as an expenses. All trustees are different and I am sure they have good days and bad days like the rest of us...

[jribe]

i think Kblandsb's situation is a lot different from the OP. The OP is paying Rent/Groceries/Utilities for a 22 y/o grandchild. Daycare expenses i would think would be looked at different (and perhaps more favorably) because of the child's inablity to care for himself.

In my situation I was able to claim some daycare expenses for my grandson who does not live with me. At the 341 my lawyer brought up the expense and the trustee wanted to know what the circumstances were and I explained and it was approved. Like I said in prev post its not the run of the mill because I feel like it expense but I dont want to go into that. ALso, my original petition was filed without this expenses so the plan had to be amended after the 341 and the permission of the trustee to include it. I would just say be prepared to show receipts, cancelled ck's ect to prove your case.. If its legit you probally have a 50/50 chance of getting some or all of it as an expenses. All trustees are different and I am sure they have good days and bad days like the rest of us...

[klandsb]

Yes you may be right. My attorney said there was NO WAY the trustee would approve the expense and I kept arguing my situation to him. I think he really didnt even want to bring it up at the 341 but knew if he didnt I would Then he was just waiting for the trustee to say NO WAY to the expense . So he kinda had to eat his words when it was approved... A small victory for me in this entire mess, but can add up to alot of money in 5 yrs...

[newbie2]

Music12, what is atrocious is that financial rules & decisions vary across the country, and vary from district to district.

I can live with rules, but make them universal for everyone stepping in to a meeting with the trustee. Enough of this bs "It varies from district to district".

If helping my mother in law is ok in one district, why not the next? Makes no sense to me at all.

[backtoschool]

In Michigan, it is very hard to get the expenses of dependents not living with you approved as legitimate expenses, especially if those dependents were not claimed on prior year tax returns.

In Michigan, unemployment insurance is considered income.