Presumption of Abuse question

[stevem3827]

Our initial 341 meeting was held on January 28, 2013. Prior to this meeting the UST sent a letter to our attorney asking for additional information. The attorney's office had yet to respond by January 28th and the UST did not show up for that meeting, so it was continued until March 4th.

On March 4th, the UST asked us several questions regarding our filing but was still waiting for the attorney to file an amended Means test and Schedules I & J. Immediately after the 341, the UST file a Presumption of Abuse. A few days later our attorney filed the amended forms. Since this date, we have not heard anything new from the UST nor has anything appeared on Pacer regarding this.

My question is how long does the UST have to decided whether to file a Motion to Dismiss or withdraw the Presumption? If it is 60 days, does that date start at the original 341 meeting or the rescheduled one?

[justbroke]

My question is how long does the UST have to decided whether to file a Motion to Dismiss or withdraw the Presumption? If it is 60 days, does that date start at the original 341 meeting or the rescheduled one?

The UST has 30 days from the filing of the Statement of Presumption of Abuse to file an actual Motion to Dismiss, or withdraw the motion.

Yes, you are seeing the issue clearly! The discharge comes as soon as possible after 60 days from the first date set for the 341 Meeting. So that means the days are measured from January 28th. Your discharge would normally come on March 29th. With the Presumption of Abuse being filed on March 4th, the deadline to file a Motion to Dismiss should be due on or before April 3rd (30 days). This is definitely an overlap.

However, the Statement of Presumption would pre-empt the actual last date to file a dischargeability complaint (a/k/a the 60-days). I would say that the Trustee has until April 3rd.

[stevem3827]

Well, the UST filed a Motion to Dismiss today. Lots of challenges (mostly due to the ineptitude of the now departed paralegal that our attorney employed) particularly for expenses for our children, more than 2 vehicles, and other items listed on the Means and schedules. One of the biggest changes occurs when you add in our average tax refund to our monthly DMI I think that we would be well over any type of qualifying for a Chapter 7.

So, if we give in and don't fight it and convert to a Chapter 13, I know that we will need to have another 341 meeting. My question is will the income and expenses be based on the new date of filing or if we convert (before being dismissed) will we still use the information from the original filing, which occurred back in December 2012? In other words, does the whole process start over as of the new filing?

[justbroke]

If you convert, the process does not restart. However, the new Standing Chapter 13 Trustee will probably want a new Form B22-C (the specific Means Test for Chapter 13), and a new Schedule I/J. Everything should be based on filing, but since you have abuse issues on the Means Test, they will probably demand a new Schedule I/J and Form B22-C.

Your other Schedules would not need to be changed.

[stevem3827]

Thanks but are the schedules and Means test still based on the original filing date or the new filing date?

[justbroke]

Thanks but are the schedules and Means test still based on the original filing date or the new filing date?

In a Chapter 13, they are not. A Chapter 13 is based on your projected income and expenses. (Well, at least the plan is based on the projection.) You technically could just transfer the information from the original Form B22-A (Means Test) to Form B22-C (Meant Test) and use the same Schedule I/J, but any smart Chapter 13 Trustee will see that you had a Motion to Dismiss (Or Convert) due to a presumption of abuse. A quick look at the motion should show the Chapter 13 Trustee exactly where the Chapter 7 Panel Trustee found discrepancies or disallowed expenses.

I would say that a Chapter 13 Trustee would/should expect a change and demand a change to the Means Test and Schedule I/J consistent with the findings of the Chapter 7 Trustee, or, at least, based on the Chapter 13 Trustee's review.

[alo]

Don't mean to piggy back on your question but something you wrote struck me...Do they always add back your refund in calculating your DMI?

I always receive a healthy refund but since my salary reduction this year, I have changed my withholding and don't expect any refund for 2013. I guess we can spell this out using one of the online calculators estimating our refund.

[stevem3827]

Still pouring over the UST disputes and trying to navigate through a B22C before speaking with my attorney.

For line 30 Other Necessary Expenses-Taxes it is correct that for this amount I should take the average from Line 44 of the 1040 form for each of the last 2 years then divide by 12 for a monthly amount? From that amount, then add in the average monthly amounts for state, local, SS and Medicare taxes? If this is correct, then I believe that the UST understated what our tax liability would be regardless of the amounts withheld/refunded.

For line 55, if I understand correctly this is the average amount of our 401K contributions and 401K loan payments, which was not allowed on the B22A.

Finally, line 57...any ideas what would qualify to be included on this line?

[justbroke]

Don't mean to piggy back on your question but something you wrote struck me...Do they always add back your refund in calculating your DMI?

A smart Trustee will do this, unless either a.) your attorney already has done this, or b.) your District requires you to surrender ALL tax "refunds" during your Chapter 13.

[stevem3827]

bumping this to hopefully get a response on my posting from 1:41 yesterday since my thread was hi-jacked.

[LadyInTheRed]

bumping this to hopefully get a response on my posting from 1:41 yesterday since my thread was hi-jacked.

There really is no problem with people asking a question that relates to the topic of thread started by somebody else. Forum members successfully reply to questions from multiple people in one thread all the time. Sometimes the questions asked by others are helpful to the OP. In this case, Justbroke's answer to alo's question is part of the answer to your question regarding line 30.

The "hi-jack" probably is not the reason your question didn't get answered. It is very difficult and a bit time-consuming to give you line-by-line advice. alo's question was easier to answer because it doesn't require looking at both bankruptcy forms and tax forms to see what lines you are referring to. JB spends a lot of time giving detailed answers to questions, but, like all of us, might sometimes give a quick answer and skip over a question that would take longer to answer. We all have lives and contribute to this forum as our lives allow.

It really is best to go over the details you ask about with your attorney, the best person to answer these very specific questions. But, I'll answer the best I can.

I think there are several ways to determine how to calculate what goes on line 30. It depends on your specific circumstances and how stable your withholding and income tax liability has been. It also may depend on local practices. If your income tax liability is consistent from year to year, what you describe may work. But, it also may not be appropriate to go back 2 years. Just make sure you understand how your attorney calculates it and that it makes sense. (I didn't look to see what line 44 of form 1040 is but suspect it is the total amount of tax liability for the year.)

Line 55: Yes, your average 401K loan payment goes there. But, depending on the current state of law in your circuit and/or district, you may not be able to deduct your 401K contributions. It could be unsettled law where you are.

I believe line 57 is for adjustments allowed under 11 USC § 707(b)(2)(B):

(B)
(i) In any proceeding brought under this subsection, the presumption of abuse may only be rebutted by demonstrating special circumstances, such as a serious medical condition or a call or order to active duty in the Armed Forces, to the extent such special circumstances that justify additional expenses or adjustments of current monthly income for which there is no reasonable alternative.
(ii) In order to establish special circumstances, the debtor shall be required to itemize each additional expense or adjustment of income and to provide—
(I) documentation for such expense or adjustment to income; and
(II) a detailed explanation of the special circumstances that make such expenses or adjustment to income necessary and reasonable.
(iii) The debtor shall attest under oath to the accuracy of any information provided to demonstrate that additional expenses or adjustments to income are required.

http://www.law.cornell.edu/uscode/text/11/707

[Pjmax]

Steve, it's a holiday weekend, things are a bit slow right now. Wish I could help.

[justbroke]

bumping this to hopefully get a response on my posting from 1:41 yesterday since my thread was hi-jacked.

Actually, we posted at the same exact minute so I missed your post!

For line 30 Other Necessary Expenses-Taxes it is correct that for this amount I should take the average from Line 44 of the 1040 form for each of the last 2 years then divide by 12 for a monthly amount? From that amount, then add in the average monthly amounts for state, local, SS and Medicare taxes? If this is correct, then I believe that the UST understated what our tax liability would be regardless of the amounts withheld/refunded.

You can take the average if it differs enough. Otherwise, using the prior year is what you should use or your current taxes. Remember, things can change over time and a Chapter 13 looks at the current view with a lean towards the future. Please be aware that the UST looks at your paystubs as well as your tax returns. If you received any refund (due to overpayment), they calculate that back into the taxes by DIVIDING the overpayment (refund) by 12 and SUBTRACTING that amount from what you have on Line 30 (and on Schedule I).

For line 55, if I understand correctly this is the average amount of our 401K contributions and 401K loan payments, which was not allowed on the B22A.

Actually, you need to check what your District allows. Most Districts absolutely do not allow BOTH a contribution and loan repayment! Trustees, especially Chapter 7 Trustees, are very keen on this portion. Additionally, Chapter 13 Trustees will see just when the repayment ends and expect a plan payment which increases at that point (a step plan).

Finally, line 57...any ideas what would qualify to be included on this line?

Please re-read Line 57. It is what you get when you add lines 54 through 56.

[LadyInTheRed]

Please re-read Line 57. It is what you get when you add lines 54 through 56.

The questions are about form B22C, not B22A.

[justbroke]

Please re-read Line 57. It is what you get when you add lines 54 through 56.

The questions are about form B22C, not B22A.

I was looking at Form B22-C but the 4/2006 version! OOPS! Official Form B22-C Version 4/2010 is the most recent version of the form. I apologize for looking at the wrong version of the form.

In any event, Line 57 is for Special Circumstances. It is the Office of the United State Trustee's position that ANYTHING placed on that line will be objected to (period).

So, anything could go on Line 57, but those "special" circumstances need to be related to something so "special" that the Trustee would loose the argument. This "special" circumstance could be related to military service for a deployed serviceman, or perhaps a special needs or disabled child (or relative), and other "special" circumstances. You will have a fight over what is on this line.