What counts as income?

[wipetheslate]

I want to file in November, but I'll be away from home for about 6 weeks come Dec-Jan for a combination of traveling for medical care (cancer checkup), the holidays, and traveling for work to Europe. I don't want to file and then have my 341 scheduled while I am gone. I also do not want to have my bank accounts frozen while I am gone.

I will be getting a travel advance of about $2000 for the work-related travel. I am not allowed anything above IRS amounts for hotel, meals, etc., and as long as I file a timely travel completion the travel money is not reported as income. But it's probably not going to look good to the trustee and it would be devastating if the money for work-required travel were counted as income.

And therein is my dilemma of which is worse: a risk of a frozen account or scrutiny from the trustee.

I will make the last payment to by CU for my car in 10 days, but I owe them money for a CC. I have recently opened a new checking account at a bank where I don't have any other business and my salary is now being direct deposited there instead of my CU account. It is a local bank, not Chase, Wells Fargo, BoA, etc. I also have a ING Savings and Checking accounts.

If the accounts are frozen, how quickly does that happen? Days? Weeks? I don't want to head out of the state and then country and find out my money is frozen. Another option is I could take my advance check and make it payable to my sister, who lives where I'll be visiting for medical care and will be traveling with me in Europe.

So what's worse: Risking a frozen bank account or risking scrutiny for the travel advance and expenses? Or do I just give my sister the checks and skirt both issues?

[backtoschool]

A travel advance that has not been used to pay expenses yet, is salary and income until the expenses are paid. When banks freeze bank accounts it can be without warning. The trustee is not going to care that you traveled for a cancer checkup and for work, but the check will count as income, and it will be a cash asset sitting in your bank account that you will have to exempt on your petition.

Turning the money over to your sister will be a fraudulent conveyance and will cause way more trouble for your sister and you than you simply depositing the money. The trustee will go after your sister for that money, as the check will be seen as a transfer of cash assets to her. Do not give the check to your sister.

[rjmwx81]

Or do I just give my sister the checks and skirt both issues?

This would probably ring the "fraudulent transfer" alarm bells for the trustee. Work-related travel compensation could be explained pretty easily as long as you kept receipts. Shuffling money over to your sister is going to look suspicious to the trustee.

[wipetheslate]

Thanks for the much need whack upside the head. Looks like I will just file in November to avoid the whole travel advance mess.

[mb10240]

Thanks for the much need whack upside the head. Looks like I will just file in November to avoid the whole travel advance mess.

Make sure that the new median income numbers that are effective November 1st don't affect you before you take this route.

[wipetheslate]

Make sure that the new median income numbers that are effective November 1st don't affect you before you take this route.

Thanks. I am an above-median filer, but I pass the means test with flying colors because of medical expenses and now reduced hours because of my medical condition. My current income (if annualized) was just below the old median, and now above the Nov 1 numbers, but my six-month look-back income is above the median.

[tcreegan]

Hi wipetheslate,

If you file in Nov, I would be worried about when the 341 is scheduled. And what if it is continued for some reason? Just worried about worst case scenario ruining your travel plans....refundable tickets?

Tom in Colo

[wipetheslate]

That is another dilemma. I was hoping I could reschedule the 341 if it doesn't come soon enough. I'd really like to file this month and get the process started but I just don't have the money.

Another complication is I want to file an adversarial proceeding for my student loans. So I don't want the 60 days after my 341 to run out while I'm out of town.

I'm a no asset Chapter 7, but dang it if the planning ain't complicated.

Hi wipetheslate,

If you file in Nov, I would be worried about when the 341 is scheduled. And what if it is continued for some reason? Just worried about worst case scenario ruining your travel plans....refundable tickets?

Tom in Colo

[tcreegan]

Hi wipetheslate,

I hate to be constantly negative on your situation, but.....you do know that almost no student loans, public or private are discharged? The few cases at the BK court level that are successful are virtually all overturned on appeal.

To get a discharge you basically have to show that you have a physical/medical disability that is going to last your whole life and you must show specifically how it prevents you from doing any work....at all, even min wage jobs. I saw a case where the guy could only move his left hand w/o extreme pain and the court looked at work he could do from home b/c that hand could move a computer mouse around.

You will need the employment income data for your area, and can show that if you pay even an interest only payment, it would put your income lower than 150% of the poverty line in your area. You need to show how you will never be able to work in your field again, and look at what jobs you can do and how much they pay.

And there is more to prepare...if you are serious about running an AP against student loan lenders, you need to go in prepared, lots of evidence to back you up, anticipate what they are going to question, and stay on top of the proceeding!

Good luck to you in this,

Tom in Colo

[backtoschool]

That is another dilemma. I was hoping I could reschedule the 341 if it doesn't come soon enough. I'd really like to file this month and get the process started but I just don't have the money.

Another complication is I want to file an adversarial proceeding for my student loans. So I don't want the 60 days after my 341 to run out while I'm out of town.

I'm a no asset Chapter 7, but dang it if the planning ain't complicated.

Unless you can prove that you will never be able to work again, you will most likely not get your student loans discharged. And even if you can prove you will never work again, you still may not get them discharged. It is very difficult to prove you will never, in your life time, be able to pay even ten dollars a month towards your loans.

[wipetheslate]

I appreciate the concern/dose of reality about student loans, but I think a defeatist attitude is part of the reason why more student loans aren't discharged. Plus, if more people filed, the feds might have enough work that they'd need to pick their cases strategically and let some go (I did see someone in the student loans forum essentially had this happen when the student loan attorneys never showed up and she received a default judgement in her favor). In the 9th Circuit the 3-prong Brunner tests is used to determine dischargeability. The prongs are:

(1) That the debtor cannot maintain, based on current income and expenses, a minimal standard of living for the debtor and dependents if forced to pay off student loans; (2) that additional circumstances exist indicating that this state of affairs is likely to persist for a significant portion of the repayment period of the student loans; and (3) that the debtor has made good faith efforts to repay the loans.

There are no hard and fast rules for any of these, so I'm not sure where Tom got his specific numerical information. Perhaps his circuit is different. And I'm not sure why backtoschool thinks I need to show hardship for the rest of my life. Neither of those specificities are in the Brunner 'test' nor are they interpreted that way in the 9th Circuit.

Yes, yes, I know it will not be easy.

Anyway, I won the disease lottery (a little black humor) and have what is considered the most deadly form of cancer based on NCI survival statistics. My local internist who was positive about treatment I received at a top cancer center on the mainland still, totally unprompted, advised me to "get my affairs in order." If I'm one of the probably less than 1 in 100 that's lucky enough to have long-term survival (10-20 years) and I was able to only pay small amounts for my student loans in the mean time, I would be rewarded with a gargantuan tax bill when it reached the point where my loans plus the massive interest that would accrue were forgiven. If the "totality of the circumstances" is invoked, well, in all likelihood I'm going to have very significant medical costs for many years, if I survive that long.

Anyway, in my line of work, I routinely have to bang out long, logical, highly detailed and referenced documents. I plan to put that skill to work in my AP.

[tcreegan]

Hi again wipetheslate,

I just don't want people to go into a student loan AP unprepared. Lots of people read Brunner and it sounds easy...but when you read court opinions it is a whole different world. The 150% of the poverty level I mentioned is from several cases east of you & I where this was the interpretation of 'minimal standard' They were ruthless, you had to have one foot in the homeless shelter.

You seem to have the 2nd prong of Brunner hands down, although given your condition this is not exactly good news....
(backtoschools 'rest of your life' is not totally hyperbole, courts have actually interpretted it that way)

The 3rd prong sounds like 'did you make payments' but also includes 'did you minimize expenses and maximize income' (esp. in the 9th Circuit)

Read up on 9th circuit student loan discharge cases, that will help you more than anything else. Be sure to catch cases from the BK Appeals court, it is depressing how many BK courts allow the student loan discharge only to have it reversed on appeal...

I wish you the best of luck, both w. your case and your health!

Tom in Colo

ps: seems to me that student loan cases get harder as you go toward the east, the 9th seems pretty debtor friendly in comparison.

[backtoschool]

I appreciate the concern/dose of reality about student loans, but I think a defeatist attitude is part of the reason why more student loans aren't discharged. Plus, if more people filed, the feds might have enough work that they'd need to pick their cases strategically and let some go (I did see someone in the student loans forum essentially had this happen when the student loan attorneys never showed up and she received a default judgement in her favor). In the 9th Circuit the 3-prong Brunner tests is used to determine dischargeability. The prongs are:

(1) That the debtor cannot maintain, based on current income and expenses, a minimal standard of living for the debtor and dependents if forced to pay off student loans; (2) that additional circumstances exist indicating that this state of affairs is likely to persist for a significant portion of the repayment period of the student loans; and (3) that the debtor has made good faith efforts to repay the loans.

There are no hard and fast rules for any of these, so I'm not sure where Tom got his specific numerical information. Perhaps his circuit is different. And I'm not sure why backtoschool thinks I need to show hardship for the rest of my life. Neither of those specificities are in the Brunner 'test' nor are they interpreted that way in the 9th Circuit.

Yes, yes, I know it will not be easy.

Anyway, I won the disease lottery (a little black humor) and have what is considered the most deadly form of cancer based on NCI survival statistics. My local internist who was positive about treatment I received at a top cancer center on the mainland still, totally unprompted, advised me to "get my affairs in order." If I'm one of the probably less than 1 in 100 that's lucky enough to have long-term survival (10-20 years) and I was able to only pay small amounts for my student loans in the mean time, I would be rewarded with a gargantuan tax bill when it reached the point where my loans plus the massive interest that would accrue were forgiven. If the "totality of the circumstances" is invoked, well, in all likelihood I'm going to have very significant medical costs for many years, if I survive that long.

Anyway, in my line of work, I routinely have to bang out long, logical, highly detailed and referenced documents. I plan to put that skill to work in my AP.

If you look at the cases of who has actually won, you will see most have severe disabilities that prevent them from ever working again.

Since there is an income contingent repayment plan for student loans, if you can make a payament on that plan, even if it is only ten dollars a month, then you are not going to be eligible for student loan discharge.

By all means try. All of us would love to see the standards loosen up a bit through precedence. I just think that you are fighting an uphill battle.