So we’re still looking at that creation of Congress – lovingly known as form B22A.
Once we calculate your “current monthly income” and we compare it to the “applicable median income”, we know whether your chapter 7 case is presumed abusive.
You can overcome the presumption of abuse if you have enough expenses to leave you with insufficient disposable income to fund a chapter 13 plan.
Today, we discuss “allowances.” Here are some allowances you can use to reduce from your income:
- an allowance depending on how many family members you have
- additional allowances if you have a family member over 65 years of age
- housing and utilities – non-mortgage expense – per local standards in IRS manual
- average monthly mortgage payment (no double dipping here against the allowance above)
- vehicle operation expense
- public transportation expense (if you actually use it)
- vehicle ownership costs (local standards) (some courts think this applies only if you have a car with a lien on it and then make you reduce your monthly car payment – other courts disagree) (think you can figure this out without a lawyer??)
These are fixed expenses for the most part – your mortgage payment is the only item here which might be variable. Think you’re done? Hardly. Once we figure out allowances, we next have to consider deductions.
Tomorrow.
David Leibowitz holds a B. A. in Economics from Northwestern University and received his J.D., cum laude, from Loyola University of Chicago School of Law where he also served as Note Editor of the law review. Admitted to the Illinois and Wisconsin bars, he is the managing member of Lakelaw, an interstate law firm with offices in Chicago, Skokie and Waukegan in Illinois and Kenosha, Wisconsin.
He is nationally recognized for his work in identifying and pursuing mortgage related claims in the context of bankruptcy. David is a member of both the Illinois and Wisconsin bars and has practiced in bankruptcy courts throughout the country. He is a member of the American Bankruptcy Institute where he is the Co-Chair of the Commercial Fraud Committee. He is ta frequent contributor to the ABI Journal and speaker at ABI events. He is an author and editor in chief of the American Bankruptcy Institute Fraud Manual published in 2010. He is also a member and Director of the National Association of Bankruptcy Trustees, a member and frequent speaker for the National Association of Consumer Bankruptcy Attorneys and numerous state and local bar associations. He is Board Certified by the American Board of Certification in both Consumer Bankruptcy Law and Business Bankruptcy Law.
David is also the publisher of Lakeblawg, www.lakelaw.com/lakeblawg, a blog dedicated to consumer and small business bankruptcy and mortgage foreclosure defense.
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