How Do You Determine Household Size: Chapter 7 Means Test

By James Jennings

How do you determine your household size when calculating a Chapter 7 Means Test?

There seems to be a lot of confusion on this subject.  This is probably because there is a lot of deferring opinions on how this is determine and what  method your jurisdiction is using at the time you file.

Let’s look at some of these methods that have been used to determine household size.  There are three methods that are popular: Heads-On-Beds, Income Tax Dependent, and Economic Unit.

Heads-On-Beds Approach

The “heads-on-beds” approach follows the Census Bureau’s definition of a household which includes everyone who lives in your house. Because the heads-on-beds approach doesn’t take into account financial contributions or relationships between household members, most courts believe that it’s too broad and inaccurately inflates household size. As a result, only a minority of courts use this approach.

Income Tax Dependent Approach

When determining household size, some courts only allow debtors to count individuals they can claim as dependents on their tax return. In general, this is the most restrictive approach because it doesn’t allow debtors to claim a person who lives in their house unless they can include him or her on their tax return as a dependent.

Economic Unit Approach

Many courts use the economic unit approach when figuring out household size on the bankruptcy means test. This method essentially looks at how many people in your household act as a single economic unit. The economic unit approach generally allows debtors to count any individuals living in their home they financially support, depend on, or whose finances are closely intermingled with their own.

Also, it is important to note, the 4th Circuit Court of Appeals approved a fractional approach based on the amount of time children live with the debtor. In that case, the court divided the number of days each child lived in the debtor’s house during the year by 365 to come up with a fraction. The court then added the fractions for each of the children to calculate the debtor’s household size.

If you’re still confused don’t feel bad, there seems to be a lot of that going around. Ultimately if the Trustee objects to your household size then it will be up to the judge to determine if you qualify for a Chapter 7.  Only he or she can make the final determination.

As Dodge said in Frank Beddor’s Seeing Redd, “I think I speak for all of us when I say, ‘Huh?'”

If you have any questions regarding a specific legal matter or legal strategy you should contact an attorney for legal advice.  If you would like to get started on a family law or bankruptcy case call us today, 602-896-9020, email us at discountdivorce@msn.com, or visit our website at DiscountDivorcePro.com.

We invite you to subscribe to Discount Divorce & Bankruptcy Twitter account: @discountdivorce and Facebook page: facebook.com/discountdivorce Both of these social media sites have value information.

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Bankruptcy: New Case Filings for July 2016

By James Jennings

Are things getting better for the Phoenix Area?

  • Chapter 7 bankruptcy filings have dropped 19.3% from July of 2015.
  • Chapter 13 bankruptcy filings have gone up 3.8% from July 2015.

Does this mean the economy is getting better in Maricopa County?

Tell me what you think.

Figures from the United States Bankruptcy Court.

The Court’s Filing Fee

By James Jennings

When a case is prepared and ready to file the court will charge a filing fee.  You can think of a filing fee as a state or federal tax that is levied to issue you a case number.   The filing fee is collected for several purposes chiefly among those is the operation of the Clerk of the Court’s Office.  While still some of the funds are deposited in the expedited child support and parenting time fund established pursuant to Ariz.Rev.Stat. §25-412.  For a complete understanding as to what the funds are used for see Ariz.Rev.Stat. §25-284.

Each county in Arizona sets its own fee for each type of case that is filed.  For example Maricopa County charges a fee of $338 – as of the posting of this blog – to the Petitioner to initially file for divorce.  While in Pima County court charges a $298 filing fee. (It begs the question, so why doesn’t everyone file in the cheapest county?  Great question.  Mainly because you would be filing in the wrong venue which could have some adverse affects on your case.)  Still in some situations they charge nothing at all.  An example of this would be to file an Order of Protection in a domestic violence situation.

Also, keep in mind that the bankruptcy court has it’s own filing fee schedule, this  phenomenon is not limited to just the state court system, though I will mostly be writing about the state courts in this posting.  To file for a Chapter 7 bankruptcy the Federal Court charges $335.

Filing Fee: Waivers and Deferrals

So what happens if you cannot afford the filing fee?  Three hundred thirty-eight dollars is a lot of money to pony up to be sure.  The good news is there is a system in place that address this issue.  If you cannot afford the filing fee you can apply to have it either waived or deferred.

The law –Ariz.Rev.Stat.12-302 -has a set of guidelines built in to help the court and their customers figure out who qualifies and who doesn’t when determining if the fee is either waived, deferred, or paid in full.

In a nutshell the law looks at the income of just the filing party and how many dependents they support.  It then takes into account the current poverty guidelines established by the Federal Government.

AJCA §5-206(E)(1) in part states:

The applicant has a gross income that as computed on a monthly basis is one hundred fifty per cent or less of the current poverty level established by the United States department of health and human services.

It goes on to further state some exceptions:The applicant’s income is considered to be sufficient, but the applicant provides proof of  extraordinary expenses, including medical expenses, costs of care for elderly or disabled family members or other expenses that are deemed extraordinary, that reduce the applicant’s gross monthly income to at or below one hundred fifty per cent of the current  poverty level established by the United States department of health and human services. Gross monthly income includes the applicant’s share of community property income.”

Also if you are receiving certain benefits like TANF or food stamps you may qualify as well.

“The temporary assistance for needy families program established by … the social security act ..”

The food stamp program …”

What is the Difference Between a Waiver and a Deferral?

A deferral means that you will be billed later.  Depending on your income, number of dependents and other factors you may have to pay a down payment of either $10 or 25% of the filing fee up front.  While in other situations you don’t have to pay anything at all up front to have your case filed.  Then the court will set you up on a payment plan.  A word of caution.  When you get the bill from the court, don’t ignore it.  They will send you to collections and take your tax returns until it is paid in full.

The income level table can be found at the Arizona Judicial Branch’s website  if you have time to search for it, or you can just contact a representative at Discount Divorce and Bankruptcy for more information.

If you still cannot afford the payment plan the court set you up on you can appeal it.  The court will review the appeal and make the appropriate determination on your ability to pay.

Now on the other-side of the coin a waiver is just that.  The court waives your fee and you don’t have to pay anything.    §5-206(F) says:

The court shall grant a waiver if the court finds that the applicant is permanently unable to pay or if the applicant establishes by affidavit, including supporting documentation, that the applicant is receiving benefits pursuant to the supplemental security income program (42 U.S.C. §§ 1381 through 1385).

In other words if your getting SSI there is a good chance they may waive your filing fee.

I should also mention that the Bankruptcy Court operates differently when it comes to waiver and deferrals.  In most cases everyone qualifies for a deferral as long as they put down at least $50 on the date they file their case. <

So if you’re like many thousands of Arizonians that are financially challenged and you have to file for a divorce, bankruptcy, or whatever and cannot come up with the court’s filing fee then there is help.

I like what Bill Gates, business magnate and philanthropist said, “I believe that if you show people the problems and you show them the solutions they will be moved to act.” And this is exactly what the lawmakers did.  They made a program to help those who have to file but are struggling to make it happen.

If you have any questions regarding a specific legal matter or legal strategy you should contact an attorney for legal advice.  If you would like to get started on a family law or bankruptcy case call us today, 602-896-9020, email us at discountdivorce@msn.com, or visit our website at DiscountDivorcePro.com.

We invite you to subscribe to Discount Divorce & Bankruptcy Twitter account: @discountdivorce and Facebook page: facebook.com/discountdivorce Both of these social media sites have value information.

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Handwriting: It’s Important.

By James Jennings

We all know what “ugly handwriting” looks like. It’s the exact opposite of those beautiful neat and often calligraphic looking works of art that we all envy.

Ugly handwriting has poor rhythm and many inconsistencies. I was told as a child by an unsympathetic nun -I went to a private school run by evil women in penguin suits- that my handwriting resembled a garden – a garden with weeds.  Well I couldn’t let that stand so I set to work to improve my handwriting.  My handwriting became such a model of perfection that to this day it hangs on display at St. Gregory’s Catholic School in the First Grade classroom.  Oh, and a quick shout out to Sister Thomas.  If it wasn’t for your cruel words of inspiration that cut like a Roman Scourge I wouldn’t be the man I am today, an over achieving prima donna with handwriting that could make an angel weep.

Well enough of my bragging.  Today, if you already haven’t guessed, I want to just say a few words about handwriting in general.   Now and again I have people come into the office and want to start a case with us.

Usually the first step in any case is gathering information.  To facilitate this we ask that our clients complete a questionnaire.  The questionnaire will ask important information like, what’s your name, what’s the name of the other party, where do you live, and the like.

However, some people, for some reason, don’t think it’s necessary or important that the staff here at Discount Divorce and Bankruptcy should be able to read the answers to these questions.  Well, nothing could be more important than being able to read your handwriting.  We want to do a good job after all.

Imagine this.  Imagine that you sat down with me to tell me about your case and you decided to put ear plugs in my ears.  Do you think that I would be able to hear you?  What if you thought it would be a good idea to speak to me in a foreign language like Swahili?  Do you think that there would be effective communication between the two us?  I bet not.  So why would you write so poorly as to make the information you are trying to convey so difficult to understand?  Why handicap your case from the very beginning?

Communication in any form, especially in the written form, is important.  If we cannot read your handwriting then it makes our job of getting your case done quickly and efficiently near impossible.

Not to put too fine a point on it but I will give you a real life example.  Last year I had a client come in to proof read and sign her documents.  She is a real sweetheart with a bubbly personality but her handwriting was horrible.  On her questionnaire that she filled out in the office she wrote what looked like an “s” but was actually a “g” in the spelling of her last name.

20160705_112032
The letter “g” looks like an “s”.

This “g” also fooled my proof reader into thinking it was an “s” as well. So we printed all of her documents prior to her coming in – close to fifty pages- and gave them to her to proof read.  This is when she told us that the name was spelled wrong.  We had to correct the name in ALL the paperwork. This name appeared in the documents more than 100 times.  It was her last name, the last name of her husband, and the last name of her three children.  That’s a lot of changes because of one little letter being poorly written.

Moreover, if she had not caught this error it would have seriously set her case back if it got filed with this mistake.  We would have to amend all the documents, ask the Court for permission to file them as amended (if it wasn’t caught soon enough), then refile them, and then re-serve them on her husband.  All this could set her case back 60 or more days in some situations.  Moreover, this would cost her additional fees for the process server.  All over one letter.

Communication is a two way street.  Not only do you have to give the information but the other person has to understand the information given.    Take your time.  Write nice.

I like what Mokokoma Mokhonoana,a writer of thought-provoking aphorisms once said, “A bad handwriting is as annoying to a reader … as an irritating voice is to a listener.”

I think Mokhonoana has a good point.

If you have any questions regarding a specific legal matter or legal strategy you should contact an attorney for legal advice.  If you would like to get started on a family law or bankruptcy case call us today, 602-896-9020, email us at discountdivorce@msn.com, or visit our website at DiscountDivorcePro.com.

We invite you to subscribe to Discount Divorce & Bankruptcy Twitter account: @discountdivorce and Facebook page: facebook.com/discountdivorce Both of these social media sites have value information.

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