Means Test Question

[djk]

If being below the median were a 'free pass' to file ch. 7, then everyone under their state's minimums would run up their credit cards, wait 6-9 months, and file regardless of their ability to pay.

I'm curious to hear 'real' scenarios also-as this is new and still being figured out-but I cant imagine that bankruptcy regulations would no longer require the person to be 'bankrupt' as in unable to pay, in order to file.

Being below the median does allow one to qualify for chapter 7. The thing I don't quite understand is if the govt is hoping people save more why amounts left over after expenses that are less than 15% of their take home pay are seen as available to ease a person out of chapter 7 into 13.

[alh]

DJK,

Do you have the actual wording of the motion the trustee used to push you to a chapter 13

[bkfiler]

well, sort of. everyone mostly trys for a chapter 7. what we are talking about are rules that keep people from getting a chapter 7 discharge.

in general, if there is money to be had then they push you into a chapter 13 becuase you do have money to pay over time. this is how it workds and how it has always worked.

and yes, the trustee (cash awards lol) and the us trustee (in some form) make money off of the chapter 13 cases. thats why they push you that way. they have a whole team of people including attorneys, and accountants to review the cases.

the trustee only makes around $80 per chapt 7 no-asset case. thats why he like to zoom those by if he doesnt smell crisp flat fresh money.

[bkfiler]

alh, its going to be worded something like "motion to dismiss or convert"

[djk]

DJK,

Do you have the actual wording of the motion the trustee used to push you to a chapter 13

I have not been pushed to a chapter 13. My interest in this thread is I filed for chapter 7 after meeting the means test. At the time of filing I had no income. Now, 1 week before the 341 I have income.

[alh]

I see what you mean about a chapter 7 but it really being like a 13. Typically Chapter 7 cases are viewed as to your financial situtaion as of the day you filed. Some money that you have earned but not yet received my be part of the estate and be property of the trustee.

Was there any paperwork at all filed by the trustee justifying why he/she feels they can do this.

Remember, too that trustees are not judges and what they say is not necessarily the law and they can be challanged. Also trustees have a financial interest as well as they get paid a percentage of what they collect.

What state are you in by the way

[djk]

My trustee has told me he really has not even looked at my case yet. (I think this is good since the 342 is next week) What I'm doing now is being paranoid and trying to prepare for all possibilities. For all I know the trustee will just discharge and close without question. But, I'm trying to prepare for any eventual outcome so I'm not surprised by anything. Also I'm looking for precedents from people who have similar cases under the new law that have recently concluded. Middle District of Florida, Orlando.

[bkinfoseeker]

the trustee only makes around $80 per chapt 7 no-asset case. thats why he like to zoom those by if he doesnt smell crisp flat fresh money.

Great post! This is what my attorney keeps harping on. As if these Trustees just don't care because they don't make very much money compared to a real lawyer. He does not understand why I am so uptight about refining the details of my case. The attitude is - just put your best foot forward and we can revise it later. Despite the fact that I have lots of debt, a chunk of money in an untouchable 401K, a decent amount of movable and cash assets which will push the exemptions to the legal limit AND, as I just learned Wed, an income just slightly ABOVE the median.
I feel attorneys are as bad as the Trustees in that they don't really make any money until creditors start objecting. After all, arguably, attorneys ARE more expensive then the filing fee that they get. My attorney has specifically manually crossed out wording on the form that my fee includes "representation in adversary proceedings and other contested bankruptcy matters."

[alh]

well, sort of. everyone mostly trys for a chapter 7. what we are talking about are rules that keep people from getting a chapter 7 discharge.

in general, if there is money to be had then they push you into a chapter 13 becuase you do have money to pay over time. this is how it workds and how it has always worked.
.

I agree to an extent, but is does not now work like it has always worked. A motion to discharge or convert must have information on why the motion is being brought. I am suggesting (and this is not just my view) that the new law does not allow anyone to bring that motion based simply on your disposable income if you are below your states median income. USC 707b(7)

While this has not been tested that I am aware ,that does not mean it is not valid. It could be that it has not been tested because the law is so new. It could also be that lawyers are not willing to go out on a limb and test it so they tell clients to simply file a 13 (as was told to me by one local attorney) and thus it is not tested because of what was decided prior to filing.

[alh]

BKInfoSeeker,

Have you actually filed yet. The state median income numbers go up on Feb 13.

[djk]

here's the thing. I have little earning potental beyond 20 grand a year and only that if I'm lucky. expenses when you are unemployed at the time of filing are lower than when you become employed after filing for the simple fact that one has no income.

[alh]

DJK,

I feel your pain. I really do. I have been in a financial nightmare the past 3 years with a family of four. I started to this research because I was worried I would be in a simliar situation. I would file BK then be worse off than before.

I really think you will not have a problem. I can give you a while list of reputable sources that believe that you can only be subjected to a means test if you are above state medium. But there is little or no case law for or against. Many attorneys do not want to be bothered with something out of the ordinary (depending on the agreement, they get paid the same no matter how much time it takes them) so they just push people to a 13 and can get back to their backruptcy mill practice.

[bkinfoseeker]

BKInfoSeeker,

Have you actually filed yet. The state median income numbers go up on Feb 13.

No, but the numbers are worse than expected as they did not go up much at all. Most of the expense exemptions actually went down (Walmart?)

It supposedly cost LESS to maintain a car (transportation) in some major cities than anywhere else in the general West Census Region. For example, if you live in or near Seattle, Portland or Honolulu you will actually get less then anywhere else in the whole West Coast even though many of those cities have special auto taxes only for people living in the city limits.

[alh]

Will you be under the median under the new numbers. If you are, you can do a 13 based on ACTUAL expenses rather than the IRS numbers (plus it only has to be for 3 years)

[StaciMM]

The set of qualifications for a ch. 7 include the little detail of not being able to pay your creditors. Having $200 income available at the time of filing doesn't fit.