Experts whats your opinion; would this raise suspicion?

[ValleYum]

My question is that when I used the forms you included I do see a small surplus. Is it possible to pass the means test but fail these Itemized deductions?

Yes, it is possible to have too much DMI even if you "pass" the Means Test.

You can list your expenses from Schedule J here and let the forum members look it over and offer advice or suggestions. It is easy to overlook an expense.

Do you have term life insurance? Disability insurance? What are your deductibles on your car and homeowners/rental policies? Remember you won't have a credit card to fall back on if you need to use your policy - so make your deductible as small as feasibly possible. You should budget an increase in your insurance costs, too, if you live in a state where credit scores impact insurance rates (call your insurance company from a phone not linked to your policy and ask them if rates increase). Adding and/or changing these few insurance items can boost your expenses legitimately.

[lvmcse]

Yes, it is possible to have too much DMI even if you "pass" the Means Test.

You can list your expenses from Schedule J here and let the forum members look it over and offer advice or suggestions. It is easy to overlook an expense.

Do you have term life insurance? Disability insurance? What are your deductibles on your car and homeowners/rental policies? Remember you won't have a credit card to fall back on if you need to use your policy - so make your deductible as small as feasibly possible. You should budget an increase in your insurance costs, too, if you live in a state where credit scores impact insurance rates (call your insurance company from a phone not linked to your policy and ask them if rates increase). Adding and/or changing these few insurance items can boost your expenses legitimately.

OMG. Thank you for the valuable information.

[AngelinaCat]

From Wikipedia:
"A student loan is designed to help students pay for university tuition, books, and living expenses. It may differ from other types of loans in that the interest rate may be substantially lower and the repayment schedule may be deferred while the student is still in education. It also differs in many countries in the strict laws regulating re-negotiating and bankruptcy."

Using a credit card to pay school related expenses is NOT the same as taking out a "student loan". You can put $200,000 on your credit cards to send your kid to Harvard and they can't keep you from discharging it in BK. It's still unsecured cc debt. It's the Sally Mae loans guaranteed by the Federal Government that cannot be discharged.

Do not depend on Wikipedia for your information. It can be a good place to start, but always verify what is posted on Wikipedia. In that anyone and everyone can sign up and contribute information, does NOT make that information reliable.

For this reason, college course teachers will NOT accept anything sited from Wikipedia. I actually have contributed information there, so I am not anti-Wikipedia.

[justbroke]

When you say DMI, is my min credit cards included in this calculation? Trying to locate a formula to see if I qualify to chapter 7. I did the means test. It said I qualify. After reading other posts, the means test is not the only thing they look at. Without my cc payments, of course I will have DMI. With them, I'm in a big hole. What's your suggestion?

Others have answered this, but the short answer is that DMI does not include "dischargeable" unsecured debt... such as your credit cards.

How long has it been since you made a school-related expense? If it's been a while, they might not look too far back. And you said you only charged about $4K in school expenses. That amount might not even be worth an AP. (Of course, I could be wrong--I'm not an expert like JustBroke. Actually, you should take anything I say with a huge grain of salt.)

No, this is what I was trying to say. If it has been awhile, the creditor would probably not care. If it was recent, and I can't define "recent", and the amount is over some threshold (typically $4,000), it could entice the creditor to at least threaten an AP and try to get a settlement.

[lvmcse]

For the purposes of insolvency, you get to include your credit card payments. For the purposes of bankruptcy and determining whether you can file Chapter 7 or need to use Chapter 11/13, you need to calculate DMI to determine what you could afford if the unsecured and surrendered secured debt were discharged.

Question about insolvency, like you said, we will probably get a 1099-c from this short sell of our home. Clearly our cc debts outweigh our $300.00 in our checking acct. LOL. I noticed the according to the IRS website that if I am insolvent, I can have the 1099-c dismissed. When I do the formula for the IRS website, I do have a pension that when I turn 65 (25 years away) I will get lets say 2000 a month roughly worth 24,000 a year. What's your opinion on this??

[justbroke]

I have never run the insolvency checker. If you file bankruptcy, then you are insolvent per the IRS' definition and you only need to file a Form 982 if the underlying debt was discharged in a bankruptcy.

[joshuagraham]

Actually, if you have been paying the son's college tuition/expenses on the credit cards that might have been a smart way to go... Student loans are becoming really bad news....

But wouldn't the debtor have to divulge to the trustee at the 341 meeting that some of the charges were for education? Definitely, if the CC was used to pay the college, and probably also if it had been done as a cash advance to be used to pay for college. Of course, for the latter case, I suppose that the debtor could something "I don't think so."

[justbroke]

The 341 Meeting isn't a "forensic" accounting of everything you spent. In fact, the majority of people, probably 90-95% matching the no-asset filing rate, face hardly any questioning other than the "standard" Trustee questioning. I have never heard, in the several 341 Meetings that I have attended including my two personal 341s, a Trustee ask if a person charged money to their credit card for education.

In fact, it is the creditor's (credit card company's) responsibility to police the bankruptcy and determine if there is any reason to seek non-dischargeability of all or a portion of the debt owed to them. I have never read where a (Panel) Trustee filed a non-dischargeability complaint for a specific debt on behalf of any creditor.

I think that many many people overestimate just what the 341 Meeting is. A quick search of the forum will show that there are 7-10 standard questions, and not much more. In fact, my Chapter 7 341 meeting was 3 questions (since I was a Chapter 13 conversion). Typical 341 meetings average 7 questions and they don't delve into individual purchases.

[btbeme]

I've been looking over your posts of the last couple weeks and want to throw in a few of my thoughts about your overall picture.

First, I strongly suggest that you slow down a bit and take some time to better understand the BK process. It is not black and white, as so many of us learn as we go through. Sure, there are some definitive parts to it - like the dollar amounts of allowable exemptions - but also a lot of push-and-pull (such as the value of a vehicle you are trying to put under exemption). Reading it as black and white ("See, Mr Trustee? I barely fit under the Means Test, but I did it!") is bound to be a painful learning experience. Even from Trustee to Trustee, and day to day with the same Trustee, things that may pass muster on one desk might not on another. So learn the process and take some time to evaluate what portion of your life may have to be shaped, modified, or sacrificed in order to allow a BK to do it's work. This process sucks, and for good reason - it tends to recalibrate reality for the petitioner, usually for the better.

Next, I'll say this (even though I can barely get the words through my gritted teeth) - If you can't do a Ch 7, you can likely do a Ch 13. A Ch 13 isn't the end of the world. The worst thing that you would want to happen is to try to squish yourself into a Ch 7 just to have a Trustee pull it apart and move you to a Ch 13 that you are not prepared to deal with. What I mean is, if you are borderline, you must prepare for the reality of either scenario. They each need their own planning for the process and for the aftermath.

Next - time is your friend, in almost every case. Some very good attorneys have told me their average time between being retained and actually filing was on the order of 5, 6, or even 7 months. Sometimes, and more often that you might think, it takes that kind of time to shape things as best as possible, as well as plan for a financial plan for working within a Ch 13. So, no rush. We all know the feelings you have. We have all been there. Just do it right, and at the right time. A great attorney can be of great value in this process.

Last - before you do anything, I suggest that you plan for Life After BK. After reading your posts, I tend to think that some fairly major renovations will have to be made in order for your post-BK life to run smoothly. You don't want to have to be in this place again.