Do I have a right to file for bankrupcty?

[Poorbill]

What is the name of your state (only U.S. law)? IN

My income has dropped significantly.
I gave up my expensive house and car.
I bought a less expensive house on land contract.
My lawyer says I do not look like a repentant debtor and the US Trustee will object because my house is still too expensive even though the monthly payment is ok. Lawyer told me what monthy payment would be acceptable for housing. I got a one-time bonus in February and it inflated my income and I failed the means test. She said that I will need to file 13 and the one-time bonus will be used to calculate my repayment even though I won’t actually get the money. All future bonuses will go directly to trustee. They will do this because they will not think its fair for me to be buy a $300k home (I could have rented the exact same home for the same money and they would not object to that). So I went from barely failing the means test to an estimated repayment of $1000/month and I won’t get any future bonus to help pay. In essence, I do not get to take full advantage of what the means test allows for standard housing, food, clothing, and transportation. She said this will be their way of objecting to me having a house that is possibly nicer than the judges. On a final note, I was told not to include my kids educational expense on the means test because they (judge, trustee) won’t think its fair when their kids don’t go.

Is the bankruptcy courts filled with kindergartners or do I have a lawyer problem?

 

[TinkerBelleLuvr]

Why didn't you use your bonus to repay your debt?

 

[Poorbill]

Because it was not enough to pay off entire debt. If you pay any creditor more than $600, the court will take it back. It was best to use to pay for insurance, car repair, and other essentials.

 

[bigun]

You have a lawyer problem. The bk code specfically allows you to use your actual housing and utility expenses.

11 U.S.C. 707

) In addition, the debtor's monthly expenses may include an allowance for housing and utilities, in excess of the allowance specified by the Local Standards for housing and utilities issued by the Internal Revenue Service, based on the actual expenses for home energy costs if the debtor provides documentation of such actual expenses and demonstrates that such actual expenses are reasonable and necessary.

I'd suggest filling out this means test and see where you stand after you have filled out schedules I and J. Just the 6 month income lookback is step one. You have to have disposable income to fund a Chapter 13 plan.
I'd interview another couple of lawyers.

http://www.legalconsumer.com/bankruptcy/means-test/index.php

I'm assuming that, you don't have equity in your home or other assets that exceed what your state allows you to exempt.

 

[Poorbill]

bigun,

Thank you for your reply. It seems to me that the means test is there to help everybody play by the same rules. I was surprised to hear from my lawyer that the trustee and judge have so much discretion in my case and that their view of social justice can trump what is clearly written and allowed for in the means test.

I'm interviewing another lawyer.

 

[bigun]

Many of us are puzzled about what Congress and the creditors lobby that pushed bk reform through Congress had in mind. The means test is pretty much a worthless execrise.

Means Test in Action : Bankruptcy Law Network

Here's a link to a case dealing with the size of a mortgage.

http://west.thomson.com/practice/bankruptcy/newsletter/2009/01/21/default.aspx#feature

 

[Poorbill]

The case study was very interesting. I thought I was reading my own case. I filled for bk in March of '08 but was dismissed becuase the US Trustee objected to my house payment. I passed the means test then but they used the totality argument. They wanted me to convert to a 13 back then but I couldn't afford the house and their repayment plan, which casued me to wait, find another home and now my lawyer is objecting (she is a court trustee as well).

Are you a bk lawyer and do you practice in IN?