Means test income vs schedule I income.

[Fletch]

Unfortunately I can't get a straight answer from my attorney which is another issue all together.

We are a family of 5 about $700 under median for our state. Our attorney used our 26 week average for this calculation.

Should my attorney be using my last 60 days income for calculating schedule I income rather than the 26 week average which is considerably higher?

[ccsjoe]

Which one is the likely one to continue being true post-discharge, 60 days or 26 weeks? Also, does it make a material difference in your DMI?

[Fletch]

The 60 day average best reflects my actual situation now and going forward. I had 2 unusually large bonus checks last spring.

Using the 26 week average I would show about $500 DMI, using the last 60 days income I would be negative about $100.

[ccsjoe]

Thanks. I was attempting to determine whether this would be worth arguing with your attorney, and the answer is yes it is. Schedule I needs to use forward looking figures, not the 6 month lookback, especially if there is a material change that impacts your cash flow going forward. Your attorney should be using your going-forward figures on I. I would press this strongly as showing a $500 DMI on J is going to get you a presumption of abuse filing and unwanted attention from the UST right off the bat.

[gman]

The 60 day average best reflects my actual situation now and going forward. I had 2 unusually large bonus checks last spring.

Using the 26 week average I would show about $500 DMI, using the last 60 days income I would be negative about $100.

ccsjoe is correct....

On Schedule I you should use your last 60 days if you can prove the bonus checks are unlikely to occur in the future.

The best way to do this would be via prior tax returns, in my personal (not professional) opinion.

A recent Supreme Court case that is very much like your situation decided this summer will back you up in court. The debtor's name was LANNING. You can Google the case for the details.

[justbroke]

For this particular case, it's really material -- the bonuses. First, you are under the median, so no "extra scrutiny" is going to happen. Second, you may still have negative DMI! The Means Test is absolutely based on the average of the last 6 months (period). You can't account for changes, as it's averaged using this method.

On Schedule I, traditionally attorneys use "today's" income. However, the Trustee is going to check your last 6 months (means test), and review your tax returns to see what your average income "probably" is. This is specifically to find people who "hide" bonuses or periods of time where they work a lot of overtime (consistent, but maybe only seasonally). This all counts.

Your issue is the large bonus checks. You'd have to prove, perhaps, that those won't happen again. In any event, these may be regular anyhow and that should still be factored. Just work with your attorney and keep asking "why".

(Adding, and why would you not wait for them to roll off?)

[ccsjoe]

Hi jb,

Can you please help me understand how this is inmaterial? Using the forward looking income OP has a -100 DMI on J, using the 26 week calculation that was used for means test but applying it to I without reflecting the change in income (lack of bonuses) OP has a positive $500 DMI on J. How does this make it inmaterial? Thanks.

[justbroke]

Can you please help me understand how this is inmaterial? Using the forward looking income OP has a -100 DMI on J, using the 26 week calculation that was used for means test but applying it to I without reflecting the change in income (lack of bonuses) OP has a positive $500 DMI on J. How does this make it inmaterial? Thanks.

I used the wrong word. Should have been material. I don't understand how an attorney files a Chapter 7 with positive $500 DMI on Schedule J.

Perhaps the attorney completed line 17, indicating that the "bonuses were one time only".

[Fletch]

The reason for not waiting for them to roll off is that I just want to move on and get this over with before I get a judgement.

Stopped paying CC's in June, retained attorney in July. Also it seems like my attorney is pushing a chapter 13 which I really can't afford.

Even without paying cc's every month I still have just enough income every month.

[gman]

The reason for not waiting for them to roll off is that I just want to move on and get this over with before I get a judgement.

Stopped paying CC's in June, retained attorney in July. Also it seems like my attorney is pushing a chapter 13 which I really can't afford.

Even without paying cc's every month I still have just enough income every month.

Fletch

Ask your attorney (or a couple for that matter) why you would have to wait in light of the Lanning case.

1. If they do not know of the case - dump them on the spot. It is a recent Supreme Court decision and any BK lawyer worth their salt should know about it. The Supreme Court RARELY gets involved in BK decisions - so this particular case should be well-known.

2. Given that they know of the case, have them explain why waiting would be in your best interest? (Note: I am not a lawyer - but given this case - I cannot see why waiting makes a difference.)

3. You should read the case. The debtor had a large bonus that was included in her Means Test but she did not include it in her Schedule I. The Supreme Court AGREED with her. Link: http://www.supremecourt.gov/opinions/09pdf/08-998.pdf

[ccsjoe]

I used the wrong word. Should have been material. I don't understand how an attorney files a Chapter 7 with positive $500 DMI on Schedule J.

Perhaps the attorney completed line 17, indicating that the "bonuses were one time only".

Whew, thanks. I thought everything I knew was wrong...LOL

[Fletch]

Thank you for all the reply's. I will read the Lanning case.

[tcreegan]

Hello all,

How about something simple; take your projected income for the year post-filing date, divide by 12 volia! avg monthy income!

Tom in Colo

[Fallonedward]

Do you think the Lanning ruling would apply to a one time severance payout?

Fletch

Ask your attorney (or a couple for that matter) why you would have to wait in light of the Lanning case.

1. If they do not know of the case - dump them on the spot. It is a recent Supreme Court decision and any BK lawyer worth their salt should know about it. The Supreme Court RARELY gets involved in BK decisions - so this particular case should be well-known.

2. Given that they know of the case, have them explain why waiting would be in your best interest? (Note: I am not a lawyer - but given this case - I cannot see why waiting makes a difference.)

3. You should read the case. The debtor had a large bonus that was included in her Means Test but she did not include it in her Schedule I. The Supreme Court AGREED with her. Link: http://www.supremecourt.gov/opinions/09pdf/08-998.pdf

[gman]

Your issue is the large bonus checks. You'd have to prove, perhaps, that those won't happen again. In any event, these may be regular anyhow and that should still be factored. Just work with your attorney and keep asking "why".

(Adding, and why would you not wait for them to roll off?)

Totally agree with this quote!