Didn't pass the means test...now what?!

[bacchus13]

After almost 6 months of prep and waiting on our attorney to get back to us on qualifying, we find out last week that we didn't pass the means test. Crap, now what!? We won't be able to talk to atty until next week and it's driving me crazy.

We drained all our assets and accounts as advised, now we don't have much disposable income after paying living expenses. We haven't been paying our creditors and they are ready to sue at this point.

Does anyone know what our options would typically be at this point? I don't see how this is going to work out.

[rogue22]

When I had first talked to my lawyer, I accidentally gave him my "take home" paycheck amount and not the gross income. Once he evaluated our pay stubs, he realized we didn't pass the mean tests either. However, our lawyer had some tricks up his sleeve... Apparently, if you have a financed car, you get an extra credit from the government. Don't qoute me on the actual number, but I think the credit takes about $525 off of your monthly income. We own our car with no financing, so he told us to have a family member put a lien on the title and draw up a promisary note of a loan and make monthly payments to that person. This counts as a "financed car" and now we get the extra government credit to bring us back down to qualify for the ch.7. He also advised that we could purchase a cheap clunker at a buy now/pay here used car lot and finance it there to qualify for the gov't credit. This credit can be used on two cars so $525 x 2 = $1050 that you can reduce your monthly income by. However, be advised that you will have to defend the reason why you had to finance your current car or purchase a used one to the trustee.. Obviously, you could say that you needed the extra money (from the family member) just to survive in these hard times. Or if you were purchasing a second car, you could say that you needed an additional vehicle because its to hard with only 1 car and your kids have school and doctors appointments, etc.

Another thing, when we were planning on filing, the 6 month look back had to 2 months where my wife and I both had extra pay checks the way that the weeks fell. By waiting a month to file, then that brough our average income down without those extra checks.

[BKParalegal]

There are infinite ways to pass the means test, too many to post here. Find out how much you are over every month and then you can strategize. Don't make a rash decision and file a 13 just because you are worried about getting sued. You can fend those off for awhile and remember judgments are district court and bankruptcy is federal , so you beat them every time.


Good luck

[keepmine]

After filling out schedules I and J, what sort of disposable income are you showing?

[bacchus13]

He had us fill out a worksheet and then they loaded it in the "system", so I'm not sure about the schedules I and J. I was wondering if he'd just advise us to do a Chapter 13 (which sounds very scarey) or if we'd be able to find some adjustments. I want to get this ball moving, the collection calls are overbearing. I have my phone on silent, but the missed call list shows 25 calls a day! I don't know how much more of this stress I can take.

[keepmine]

You have to find out where you stand.
Start by calling the lawyer and asking for an explanation. ALso, interview another couple of lawyers.

[BKParalegal]

I used to consult for BK firms in middle district Florida and i was shocked at the level of incompetence and I consider myself incredibly incompetent! So that is bad. No atty should take 6 months to figure your case out and then just blanket tell you that you didn't pass. To not pass part 2 of the means test means you had to have more than $167 in disposable income left each month.

People get on here and ask what is left on I and J ( this is a calculation of your income and expenses today and not the 6 month historical look back). but totality of circumstances does not apply in every district, which means that I And J are a better view into your finances since it is what is current rather than looking at what happened over the last 6 months.

If your atty cannot give you answers on how to possibly fix the situation then ask why are you paying him, because any schmo can fill out paperwork but an attorney is hired to advise you.

Good luck

[bacchus13]

Thanks for the advice. Let me clarify that it didn't take our atty 6 months to let us know. We had previously consulted with another atty who told us to close our accounts and liquidate our assets and stop paying the credit cards. That atty took forever to get back with us when we told him we were ready to retain him, so we found another lawyer. We retained that atty immediately and he took 3 weeks to tell us we didn't pass the means test.

I'm afraid to consult with too many attys because consulting is one thing, and retaining for means test is another.

Also, I understand the means test to be based on monthlyincome, not disposable income (Fla.). If we make more per month than "the average" family in our county (I believe it's $65K), then we can't pass the means test. We meet with the atty tomorrow morning and I hope we have a better explanation. Fingers crossed that we can make this work!

[ValleYum]

If you make more than the "average" family in your state then you are over the median income *but* you can still pass the Means Test. This is true everywhere.

My hubby and I made more than the "average" family and we were still able to "pass" the Means Test.

Trust me when I say that many people are confused by the Means Test and it seems so scary. Look for an free online means test (this is a great one http://www.legalconsumer.com/bankrup...means-test.php ). Carefully read the instructions and run the test for yourself. This handout from the US Trustee website explains line by line what you need to include or compute for the Means Test: http://www.justice.gov/ust/eo/bapcpa...ne_by_line.pdf

The Means Test is based on your monthly income but what it calculates is your disposable income to see if you are eligible to file a Chapter 7. If you have more than $167 left over after your allowed expenses are deducted, you are deemed to have enough disposable income to fund a Chapter 13 bankruptcy.

I hope you get some good information from the attorney tomorrow. Keep us posted as to what you find out!

[daylate]

Just another point to consider about the 167 a month. From my understanding, EVEN IF, you are over that amount, and less than 194 a month, you could still be ok. If you multiply your monthly excess times 60 months and the total is less than 11,500(exact number is a bit over) AND that total represents less than 25% of your unsecured debt, then you still pass the means test.
If you really want to torture yourself check out this link:
http://www.law.cornell.edu/uscode/ht...7----000-.html

There are lots of other sites that talk about the means test. Google it and look for ones that talk about all three parts to determine if you pass.

So hang in there-hopefully you can figure out ways to qualify

[ValleYum]

Thanks daylate - I totally spaced on the second part you mentioned above - too much household chaos whilst posting!

[bacchus13]

Thanks for the great info everyone! We went over all the paperwork today and it turns out that some figures were messed up when they were put in the system. So, our income was higher than should have been by about $3,500! After looking at all our exemptions and taking out the incorrect income, we made it. Whew! We'll meet again next week to set up for the filing. Needless to say, we're extremely relieved to know that we qualify.

I'll keep you posted.

[tcreegan]

Hi all, Hi bacchus,

The NOLO book (www.nolo.com) is usually a must-have for pro-se filers, but it might help you help your attorney. You can get a feel for the overall process and details on different aspects. Not saying become an armchair quarterback, but it might target your questions, make attorney contacts more efficient.

..."armchair quarterback" ...does anyone still use this? How about "backseat driver" ? ...maybe its "backseat GPS" now...

Tom in Colo