Presumed abuse letter

[justbroke]

So her tax refund under the chaper 13 is income under the new 7? Would that not mean that my tax debt would be added to items paid?

It's income for the purposes of calculating your REAL disposable income. Tax refunds have always been successfully argued, by Trustees, as simply "overwithheld" income. As income, it should be included in the "current monthly income" (CMI) calculation. If part of it is from the earned income credit (EIC) that could be argued as not part of the CMI calculation.

That tax refund would give an added $854 a month(average) income. So it would have been better to keep my income at $760 and not change it to $1760?

Probably! Strategy is strategy and this strategy may not have worked out.

How can they have a tax refund as added income when its income earned and counted in the chapter 13 gross average? Isn't that double earnings?

A refund is not "added" income. Think of it this way. You earn $4,000/month gross. $1,500 is taken out each month for taxes. At the end of the tax year, you get a $6,000 refund. That's because your withholding was $500/month too much. That's not double counting because your taxes are an allowed expense. If you don't have that expense, then it gets added back to your disposable income. In my example, your total Schedule I income (with taxes taken out) would have been $2,500. However, it should have been $3,000 based on the refund.

I know that almost everyone thinks it's double counting, but it's not.

Hopefully your attorney can get this all fixed. A tax refund that is over $854/month is a LOT of money that your attorney left out if indeed he didn't include it in your income already!

[Bkman2]

So her tax refund under the chaper 13 is income under the new 7? Would that not mean that my tax debt would be added to items paid?

That tax refund would give an added $854 a month(average) income. So it would have been better to keep my income at $760 and not change it to $1760?

How can they have a tax refund as added income when its income earned and counted in the chapter 13 gross average? Isn't that double earnings?

We are set to keep and pay on the house.

[justbroke]

It could be the tax refund. Did your attorney factor the tax refund into your income? If not, the UST may be using the tax refund as overwithheld income. It's not an over-the-median/under-the-median issue. It's an income versus expense issue.

For example. Let's say that you're a family of 4 and earn $4K/month or $48k/year. Regardless of the median income, your (allowable) expenses total $4,200/month putting you at a negative monthly income of $-200. However, you have received gracious tax refunds of averaging $4,800/year. The attorney did not factor this. The UST will see this and claim that you have an additional $400/month of earnings due to overwithholding. That additional $400/month now has your disposable income at a positive $200/month. This is above both threshold amounts of $109.58 and $182.50 for an abuse determination.

Also, if you have "earned" but unpaid income, that could be at issue as well. I do like that your attorney adjusted your income on Schedule I to account for your new income. My inkling is that there is something else. You're keeping the house, but what did the attorney put on your Statement of Intentions? Hopefully he wrote "stay and pay" and not "surrender". If he wrote "surrender", that could be an issue as well for the UST.

Until the UST files a motion to dismiss, you really won't know what they are thinking about. However, they will generally contact your attorney before the motion is submitted, to try to fix anything that is just a misunderstanding.

[Bkman2]

I just looked at the B22a form filed and the "presumption does not arise" box is checked. My attorney had to put that I excpected to have an increase in my income of $1000 a month because my income average fell to $760(gross), non-filing wifes fell to $2409(net). So he made it $1760 for me giving us a total of $4169(net) $5498 (gross) and the state limit for family of 3 is $5568(gross). Average money out was $4275 giving a -$105 a month instead of -$1105.

I can see the concern for that, my commissions from Dec/Jan and her tax refund is what covered it all until now. I got paid in Jan and then nothing until the end of July.

I have been able to keep up with the home payments so we are going to keep the house.

[justbroke]

Should I have concern over this or do you think its just something everyone gets? Its a general letter with no real information on what they are looking for/at.

Unfortunately, yes... this is cause for concern. While the "panel" trustee (Tee) saw nothing wrong and you're a no asset case, the United States Trustee (UST) has found something in your filing.

Check your Form B22A and see if the Presumed Abuse box is checked at the top. If it is, then your attorney already knew this and is probably has already prepared to fight. If not, then the UST finds that one or more of your expenses shouldn't be on your Schedule J and/or your Form B22A and it looks as though your case is an abuse.

Work closely with your attorney over the next 30 days. The UST has only 30 days to either file a motion to dismiss for abuse or to withdraw the presumption.

Just wondering... do you own a home and if so, are you surrendering it in the Chapter 7? Also, are you over or under the median income?

[Bkman2]

So I converted my 13 to a 7. August 23rd I had my new 341 meeting. Trustee asked me the same questions as everyone else. I was told I may have to pay something for my car but trustee didn't ask about anything, just if paperwork was right.

September 7th I got a letter "Statement of Presumed Abuse". I'm waiting for my attorney to get back to me about it. I looked on Pacer but I don't really understand the site. It does have at the top of the page....Chapter 7, Asset:NO


Should I have concern over this or do you think its just something everyone gets? Its a general letter with no real information on what they are looking for/at.