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Tricky budget/401k/tax refund analysis for Chapter 7
True in the Chapter 13 Jim, but not so sure I agree about Form 22A
in Chapter 7. Line 5 doesn't necessarily ask for mortgage payments
to be deducted there. Those can get put in Part VI (Line 42), no?
There's nothing in Part VI which states you must exclude secured
debts that/could /be (but are not) subtracted in Line 5. Or are
there decisions on this issue already?
*************************
Mark J. Markus
Law Office of Mark J. Markus
11684 Ventura Blvd. PMB #403
Studio City, CA 91604-2652
(818)509-1173 (818)509-1460 (fax)
web: http://www.bklaw.com/
Certified Bankruptcy Law Specialist--The State Bar of California
Board of Legal Specialization
This Firm is a Qualified Federal Debt Relief Agency (see what this
means at
The post was migrated from Yahoo.
Nope...not even close. There's more debt on the primary residence
alone, not even getting to unsecured debt which is all consumer.
*************************
Mark J. Markus
Law Office of Mark J. Markus
11684 Ventura Blvd. PMB #403
Studio City, CA 91604-2652
(818)509-1173 (818)509-1460 (fax)
web: http://www.bklaw.com/
Certified Bankruptcy Law Specialist--The State Bar of California
Board of Legal Specialization
This Firm is a Qualified Federal Debt Relief Agency (see what this
means at
The post was migrated from Yahoo.
Thanks. Already doing that, but I don't think the difference is
going to be sufficiently significant
*************************
Mark J. Markus
Law Office of Mark J. Markus
11684 Ventura Blvd. PMB #403
Studio City, CA 91604-2652
(818)509-1173 (818)509-1460 (fax)
web: http://www.bklaw.com/
Certified Bankruptcy Law Specialist--The State Bar of California
Board of Legal Specialization
This Firm is a Qualified Federal Debt Relief Agency (see what this
means at
The post was migrated from Yahoo.
charsetF-8;
format="flowed"
The tax liability goes up if the 401(k) contributions are not made. If
the loan is not paid, all of the remaining loan balance becomes taxable
income to the debtor after 60 days + 11% federal and state early
withdrawal penalties (if applicable). Debtor has to pay estimated
taxes to cover that amount currently. Have accountant figure the
extra tax and divide it into the monthly budget for 2012. It is for
current taxes not arrears that can be paid over 60 months. Of course
the tax expense will be lower a year from now, but this might help with
the means test now.
Mark T. Jessee
Law Offices of Mark T. Jessee
"A Debt Relief Agency"
50 W. Hillcrest Drive, Suite 200
Thousand Oaks, CA 91360
(805) 497-5868 (805) 497-5864 (Facsimile)
On Tue, 17 Jul 2012 18:41:11 -0700, "Mark J. Markus" wrote:
Trying to figure out a way to squeeze a client into a Chapter
7 case. Here are the salient facts:
1. Client will pass the means test, thanks in part to a slight deficit
being run on a rental property (about $300 per month)
2. Debtors have a 401k loan and contribution which total about $900
per month between them. The 401k loan ($740/month) has about 3 years
left to repay.
3. Despite having fairly high income and taking tax withholding
exemptions of 8, due in part to the rental property, the debtors get a
tax refund of nearly $11,000 (at least they did in 2011).
If I include the anticipated tax refund as additional "income" (or
decrease the debtors' tax withholding accordingly), they are breaking
even on their budget IF the 401k loan/contributions are allowed as
expenses (which I know they're not). Without the 401k deductions, they
would have a surplus near $1,000, unless I do NOT include the
anticipated tax refund amortized over 12 months.
Ironically, if I file a Chapter 13 case for them, they would be showing
a monthly deficit (but they could squeeze out $100-$150 a month if they
had to, and then increase after the 401k loan is paid off). I realize
Chapter 13 makes the most sense but they want to see if we can get them
into a Chapter 7 somehow.
Thoughts?
*************************
Mark J. Markus
Law Office of Mark J. Markus
11684 Ventura Blvd. PMB #403
Studio City, CA 91604-2652
(818)509-1173 (818)509-1460 (fax)
web: http://www.bklaw.com/
Certified Bankruptcy Law Specialist--The State Bar of California Board
of Legal Specialization
This Firm is a Qualified Federal Debt Relief Agency (see what this
means at
The post was migrated from Yahoo.
Trying to figure out a way to squeeze a client into a Chapter 7
case. Here are the salient facts:
1. Client will pass the means test, thanks in part to a slight
deficit being run on a rental property (about $300 per month)
2. Debtors have a 401k loan and contribution which total about $900
per month between them. The 401k loan ($740/month) has about 3
years left to repay.
3. Despite having fairly high income and taking tax withholding
exemptions of 8, due in part to the rental property, the debtors get
a tax refund of nearly $11,000 (at least they did in 2011).
If I include the anticipated tax refund as additional "income" (or
decrease the debtors' tax withholding accordingly), they are
breaking even on their budget IF the 401k loan/contributions are
allowed as expenses (which I know they're not). Without the 401k
deductions, they would have a surplus near $1,000, unless I do NOT
include the anticipated tax refund amortized over 12 months.
Ironically, if I file a Chapter 13 case for them, they would be
showing a monthly deficit (but they could squeeze out $100-$150 a
month if they had to, and then increase after the 401k loan is paid
off). I realize Chapter 13 makes the most sense but they want to
see if we can get them into a Chapter 7 somehow.
Thoughts?
*************************
Mark J. Markus
Law Office of Mark J. Markus
11684 Ventura Blvd. PMB #403
Studio City, CA 91604-2652
(818)509-1173 (818)509-1460 (fax)
web: http://www.bklaw.com/
Certified Bankruptcy Law Specialist--The State Bar of California
Board of Legal Specialization
This Firm is a Qualified Federal Debt Relief Agency (see what this
means at
The post was migrated from Yahoo.