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Elizabeth Prentice
Elizabeth Prentice, Attorney
Category: Bankruptcy Law
Satisfied Customers: 174
Experience:  Managing Attorney for one of the largest consumer bankruptcy firms in America.
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From Jan 2013 to july 4th week ending of 2013 I was making

Customer Question

From Jan 2013 to july 4th week ending of 2013 I was making $1730 net pay a month but a few months in that time frame i was making $1980 net pay but the last two paychecks were average $1730 net pay month (or 400 net pay a week) on july 31st i filed chapter 7 BK with a budget on $1715 on the scedules and did not put anything down on anticipated income section on scedules because i did not know what my new job salary would be until now.My question is all the job offers I am getting right now are approx $2400 net pay a month which is far above my $1715 budget on the BK scedules which yields disposable income which can covert my case to the chapter 13, if i make more than $150 disposable income i can pay my unsecured in the next 5 years or 25% of unsecured which i dont want to happen when will it be safe to take a job right after the 341 meeting or should i wait maybe a month after the 341 meeting so the trustee doesnt see this. and do you think the trustee will also look at my $1980 net pay a month above too which is in danger of disposable income as well, i did received my 341 meeting notice it doesnt say presumption of abuse DOES NOT arise but may not matter. i know the law of BK but in reality BK should be a fresh start. please could you show the BK codes with your answer you provide to me.
Submitted: 4 years ago.
Category: Bankruptcy Law
Expert:  Elizabeth Prentice replied 4 years ago.
I am a bankruptcy attorney and I would be happy to assist you. When filing for Chapter 7 bankruptcy relief in Michigan, a single filer must make under $45,029.00 per year (GROSS), if filing after May 1, 2013. This is set by the US Department of Justice. The bankruptcy court determines this amount and whether you qualify by examining Form 22A. Form 22A is called the "Means Test." The government has set allowances for the Means Test. To determine your income the Court reviews the look back period of six months. The trustee is required to review your paystubs from the last paystub you received before filing to six months backwards.

So, in your case you would take the last pay stub you received in July and look at the ytd gross amount. Then take the last paystub you received in January and look at the gross amount. For example) if you received year to date $20,000 gross on the last paystub in July. And your last paystub in January said gross ytd earnings of $2,500.00. Then your gross income for the 6 month look back period would be 20,000 - 2,500 = $17,500, divide that by 6 and you have $2,916.66, now multiply that by 12 and you get = $34,999.99. This would qualify you for bankruptcy since this annual amount is under the $45,029 limit!!!

Ok, now to answer the rest of your question. Schedule I should state your income minus all the deductions for the month in which you file (July) just input the cumulative amounts from all your paystubs in July. Schedule J is your typical monthly budget. Schedule J should account for almost every dollar you get on Schedule J. You want to make your budget meet your income. If you have money (for ex-$100.00) disposable income left over on schedule J, there is no need to worry!!! Your case can only be converted based on you failing the means test (form 22A). If you have $1,000 a month left over on schedule J as disposable income, then you probably haven't inputted your budget right. Think about every dollar you spend and make sure it is listed.

Lastly, congratulations on receiving job offers!!! If you receive a new job after filing bankruptcy, you are free to accept it. The trustee can not convert your case if you start to make more money after filing bankruptcy. In fact, if you won the lottery today you would still be just fine in your bankruptcy! What matters is the six months before the day you file, not a day after. This is because you had no idea that you were going to get a new job after filing bankruptcy.

You can find the 6 month look back law here at Section 10(a):

You can find the majority of bankruptcy laws in Title 11 of the Bankruptcy Code.

I hope my answer has assisted you and that you will provide me a positive rating!
Customer: replied 4 years ago.

hey elizabeth - i have read the BK laws briefly and I feel based on what i read the means test is nothing more than a trick the govt puts there to make you feel ok because in 11 USC 707b presumption of abuse its states if you can pay 25% of unsecured then conversion to a 13 would happen your example of 34,999 is approx $2100 net pay a month my budget is $1750 the disposable would be $350 enough to pay 25% of unsecured. so the trustee would not issue a presumption of abuse exception? What i really meant on my question is does the trustee after the 341 meeting do a periodic audit on me to see if im working or not do they have extensive databases available to them to see how much im making without paystubs I saw this database years ago when i was at the unemployment office all she did was is input my social and got all my job pay info in the last 5 years.

Customer: replied 4 years ago.

based on what ive read I dont understand why in the BK code they have the median income and they also have presumption of abuse in 11 USC 707b which has greater power on the BK decision on chapter 7 because in there if you can pay 25% of unsecured creditors in 5 years then conversion to chapter 13 will happen. you stated $34,999 year but that is approx $2150 net pay month my budget is $1750 on scedules that is $400 disposable income ($400 * 12 * 5 = $24000 --- 50% of my unsecured)

Expert:  Elizabeth Prentice replied 4 years ago.

First, you are NOT in a Chapter 13. So STOP reading the Chapter 13 rules. I realize you are worried about your bankruptcy, and are trying to understand a large text of rules and procedures which are incredibly difficult to understand. They have to be read in conjunction with other rules and then do not forget to read them with ALL of the case law that interprets them in the circuit which you are in. This is why most people in America hire an attorney to file their bankruptcy. It is why people like me go to law school, take bankruptcy classes for 4 months at a time 9 hours a week, take and pass bar exams and practice a career in the field. Bankruptcy attorneys are not just for show. ;)


Next, I can guarantee you with 100% assurance that the 341 Meeting of Creditors is NOT an audit. It has never been an audit, NOR is its purpose to try and convert you to Chapter 13. You have been clearly mislead or misinformed. EVERY debtor in America is required to attend the 341. The trustee will interview you under oath to determine if you have properly a) filled out your bankruptcy schedules, b) providing him/her all your required paperwork(6 months paystubs, 2-4 years tax returns, 6 months bank statements, etc), c) see if you have been truthful. Unless you are hiding bags of money and jewels somewhere, have an airplane you haven't listed, or have lied grossly on your petition, you should not be worrying. The trustee has NO desire to convert you to a Chapter 13, since it would be against his interest. He gets paid to administer your estate in bankruptcy. Additionally, there is NO magic audit website he is looking at. He does; however, look at your tax returns, which can clearly show a picture of someone's income. Even if you were making millions years ago, it will not be cause for a conversion to a Chapter 13.


Good luck at your 341 and stop worrying!