Presumed abuse letter

[justbroke]

JMy attorney said that a tax refund can be looked at as income but for the means test it is not.

The Means Test is not the problem. It's the Schedule I income.

(Not to get off on a long tangent, but I have been constantly telling people lately, that the Means Test means nothing, really, in the calculation as to whether your case is an abuse. It's only the "first" test (a so-called bright line test). The real test is the Income (Schedule I) less Expenses (Schedule J) determination of your disposable income. This is why I say the means test means nothing. Almost all USTs look to Schedule I and Schedule J for the "truth". If you show positive disposable income on Schedule J, then that's where you get into trouble. I have no quarrels with your lawyers statement that tax refunds don't count on the Means Test. The problem is that your means test is not the problem. )

Best of luck with the UST. Sometimes they withdraw their statement without much fanfare.

[Bkman2]

Just spoke with my attorney. I was told we will have to wait until the US Trustee does something or asks for something. She said that because I converted my case them they will look at everything to make sure I'm not making things up.

My attorney said that a tax refund can be looked at as income but for the means test it is not. As for the $1000 anticipated incease in income, I was told that they can not count that because it is future income and not an average of the last 6 months income.

So I guess I have to wait and see.

[Bkman2]

Thanks for you help on this. I'm just tired and want this to end. It has been one problem after another. Only good side is its a no asset case now. I emailed attorney again and if I don't hear back I'll go by on Monday.

[justbroke]

Now I need to know how to fix this problem.

Just work with your attorney. Your attorney may need to retract the "anticipated" income. I don't know why the attorney did that anyhow! While Schedule I is "current with a slight lean towards the future"... I have never ever seen someone put "future" anticipated income on line 1!!! There's a comment line specifically for making a mention of things, but MOST people use that to specify anticipated decreases in income.

In any event, your attorney will need to fix your Schedule I, if the tax refund is the problem. Otherwise there are other things to work on. Your attorney will contact the UST. Just stay on top of it.

[Bkman2]

Per my attorney they look at the last six month average. Not what you "may" make after you file. I gave the paystubs, P&L's and bank statements for 6 months. I also gave both of our tax paperwork for 2009.

Family of 3 is $5568 for my state

My gross average was $761, wife's was $3738. With added tax refund average hers is $4592 for a total of $5353 gross per month. Still under the limit.

The extra $1000 attorney put as anticipated future income for me was just that, "anticipated". Case was filed end of July. I can show July to Sept paystubs, P&L's and bank statements that the "anticipated" income never took place.

I do agree that if they count the "anticipated" income that never happened then yes I would be over the limit by $785. but I never got that increase.

Now I need to know how to fix this problem.

[nfreeze]

Justbroke - Thanks for the response. I am under the median by about $4K. Since I filed pro se, the letter came directly to me for the additional paperwork. I sent back everything they requested on 8/26 and had my 341 on 9/8. I would think that had there been an issue, I SHOULD have heard something before the 341 or maybe as you say, AT the 341. The only thing I have that could really be an issue would be my company which is set up as an LLC. I did $22K in business over the past 6 months as I donated a kidney (which they screwed up) in March and my health has not allowed me to focus on it.

A friend of mine said that since they only requested 6 months of paperwork, its probobly nothing serious or the UST would be digging way deeper. I think another forum member ditto'd that in another thread.

Thank you for the response! I appreciate you taking the time.

Regards -

[justbroke]

I'm lost on all of this at this point. My income was and is below the limit. The trustee changed it from asset to no asset with no distribution. Now the US trustee is saying my income is to high????y.

Because your income was probably calculated incorrectly! If the tax refund is the issue, then you are over the median income. It is also making you have positive disposable income which is above the limit ($109.58 and/or $182.50) for a Chapter 7 case.

[justbroke]

So here is a question- if the panel trustee had entered a "No distribution" entry on your case and has requested to be excused from any additional at trustee, could the US Trustee over-ride the panel trustee or do they seem to agree before a "No Distribution" has been entered?

The UST and the Panel Trustee are two different people with two different jobs. The Panel Trustee is responsible for liquidating your estate and paying creditors. While the Panel Trustee can also seek to dismiss your case for abuse, it is the UST's primary job to seek dismissals where you are not deserving of a discharge.

Curious as I am now in the 60 day club but did have a request for records from the US Trustee which I did provide about a week before the 341 hearing. (6 months bank statements, 6 months of pay stubs, 6 months of utility bills and last mortgage and auto loan statements)

That means that the UST is reviewing your case. You were probably over-the-median income. In the over-the-median cases, the UST takes a much much much more closer look at the entire case, as that is their job. Generally speaking, the UST "usually" appears at the 341 Meeting to question you under oath, if there are issues. However, the non-appearance of the UST at the 341 Meeting doesn't mean there are not issues.

Additionally, if the UST has issues, they usually contact your attorney rather quickly (within days of the 341 Meeting). You are usually "on notice" if the UST has problems with your case. They usually don't spring a motion to dismiss on you without some prior notice.

[blockhead]

I'm lost on all of this at this point. My income was and is below the limit. The trustee changed it from asset to no asset with no distribution. Now the US trustee is saying my income is to high????

Still no answer from attorney.

They (UST and CH7 trustee) operate independently

[Bkman2]

I'm lost on all of this at this point. My income was and is below the limit. The trustee changed it from asset to no asset with no distribution. Now the US trustee is saying my income is to high????

Still no answer from attorney.

[nfreeze]

So here is a question- if the panel trustee had entered a "No distribution" entry on your case and has requested to be excused from any additional at trustee, could the US Trustee over-ride the panel trustee or do they seem to agree before a "No Distribution" has been entered?

Curious as I am now in the 60 day club but did have a request for records from the US Trustee which I did provide about a week before the 341 hearing. (6 months bank statements, 6 months of pay stubs, 6 months of utility bills and last mortgage and auto loan statements)

[justbroke]

I'm thinking that the UST added the $854/month average income tax return to your monthly income. Also, the over/under median income determination is done based on your gross income.

In any event... the UST doesn't like your numbers and has substituted his/her own numbers. This is common when they don't like a certain expense you're taking or they feel that your income was under-reported. The "requirements" statement is irrelevant, really. The true reason to deny a discharge, would be that your income less allowable expenses... is more than the allowed amount ($109.58 or $182.50).

[Bkman2]

I'm starting to understand the letter more. Letter says my current income mulitplied by 12 in not less than the requirements. I think I'm really lost now.....

Schedule I

My income $760
Spouse $3738 minus payroll deductions $2409

Anticipated incease $1000 for me (commission only work)Can show it never happened with P & L statements

TOTAL 1761+2409=$4170 x12=$50,040

Limit for family of 3 =$5568 x12=$66,816

If they did they tax refund average of $854+1761+3738=6353= over the limit

B22a has me $386(minus business costs) + spouse $3540 = $3926 TOTAL of $47,112

[justbroke]

I know he didn't count it because it was her refund and she didn't file.

Well, maybe the attorney "offset" it as spousal income that doesn't contribute to the household. However, you just admitted that you used that refund to survive all these months. So that particular argument wouldn't go far.

My $1000 is put down as "anticipated increase of income" on my schedule I

IT may be too late since you have already put the UST and Panel Trustee on notice that you do, in fact, anticipate an increase... enough so that you included it in your Schedule I income calculation.

[Bkman2]

I know he didn't count it because it was her refund and she didn't file.

Maybe if that is the problem they can remove my fake added $1000 a month and add her tax refund. That would still have me under. I think it would be even less. If the fake +$1000 has me at -$105. then add the $854 (Tax average) minus the fake $1000 is -$251dmi

My $1000 is put down as "anticipated increase of income" on my schedule I