A reaffirmation is an official way to “reobligate” yourself on the loan. This involves the lender sending us a reaffirmation contract to be signed by you.
What Is “Heads in Beds” in Reference to The Means Test?
“Heads in beds” refers to a method of how to calculate the size of the household for means test purposes. The first obvious household determinant would be, how many dependents you are claiming on your tax returns. For example, a married couple with two children would be a household of four. Now ideally, in a very simple world, they will be claiming both of those children, as dependents, on their tax returns. But let’s say in a variation of the example that this married couple is a second marriage, and each spouse is bringing a kid from a previous marriage, and they’ve got an agreement with their ex, that every other year, they are going to trade claiming that child as a dependent on their income taxes.
You can run into a situation where even if you’re caring for the child, the child is living in your house, you are paying utilities, food and expenses and you have an ex who is contributing as well, but the child is not claimed on your tax returns that particular year as a dependent, the court will allow what’s called “heads in beds.” If the person is in your house at least 50% of the time approximately and you are contributing to that person’s welfare, even though you technically don’t claim that person as a dependent on your tax forms, you can claim that person as a member of your household for purposes of the means test. This can even be extended to a roommate who wouldn’t be your dependent for tax purposes; but if you are living with somebody in the same household and are sharing expenses with them, you can claim them as a member of the household.
The flipside of that coin is that you must also claim any contributions that they are making to the household income. For example, let’s say two roommates in an apartment split everything down the middle: they split rent, utilities and food. You could list both of them as members of the household, but then you’d also have to include the roommate’s household contribution for half of the expenses as income for the other roommate filing for bankruptcy. This would obviously increase the projected annual gross. But more often than not, it’s not going to increase it enough to get the filer over the median income for a household of two: obviously, this varies case-by-case. So it’s a bit of a trade-off.
The marital adjustment deduction comes into play if only one spouse is filing for bankruptcy but the other spouse’s income is included on the means test to the extent it contributes to the household. So typically, what this means is that for purposes of deductions from the paycheck, such as withholding taxes, life insurance, disability insurance, medical insurance and things of that nature, the marital deduction is basically netting out those expenses and only putting in the portion of the spouse’s income that is actually being paid for expenses, like mortgage, utilities and food. So the marital adjustment deduction is a way for the court to be fair when it comes to those paycheck deductions, but actually, if your spouse is paying child support or has debts in his or her name that aren’t benefiting the person filing bankruptcy, you can actually increase the marital adjustment deduction by that amount because the argument could be made that it’s not benefiting the person filing for bankruptcy.
Additional Information On the 341 Meeting Of Creditors And Means Test In Minnesota
We’ve been talking about trustees, and I suppose it makes sense to talk about the designation between a panel trustee and the United States trustee. So when we talked about the trustee whom you meet with at the 341 meeting, that’s actually the panel trustee. The panel trustee is part of the panel of designated lawyers who are allowed to be trustees in either a chapter 7 or a chapter 13 case. In Hennepin County, there are seven that the cases are rotated between, and the panel trustees’ focus in chapter 7 is really just on the assets and in chapter 13 more so on the monthly budget.
Then there is the US trustee’s office, which is part of the Department of Justice. These trustees are tasked with the qualifications for chapter 7 and verifying the information on the means test. So every time a case is filed, the US trustee’s office looks at the means test; and if they feel that it’s a very close call, they may follow up with what’s called a 707(b) investigation. In a 707(b) investigation, the US Trustee’s office obtains verification of the income information that you used to complete the means test and monthly budget. This usually comes up in cases in which passing the means test was close, so they verify that the paystubs are accurate and there have been no mistakes made.
Sometimes, when we talk about the marital adjustment deduction, I’ve had cases where we’ve had to provide documents to justify, to the US trustee’s office, the deductions that were used, and the expenses of the non-filing spouse and the reasonable and necessary nature of those expenses. Those don’t come up all the time, but they do come up, and that’s why it’s important that you have a qualified, experienced lawyer who knows what they’re doing because, when you are hiring a lawyer, you are not just paying for somebody to fill out the forms. You are paying somebody to do legal analysis for you, somebody who knows the law, can look at your circumstances and situation and get you the best outcome possible.
For more information on “Heads In Beds” In A Means Test, a free initial consultation is your next best step. Get the information and legal answers you are seeking by calling today.
Chapter 13 is essentially a payment plan that you organize through the court system. Think of it as a consolidation loan with teeth.
There are 2 things you must do after your case is filed: (1) attend the meeting of creditors (aka the 341 hearing); and (2) complete a debtor’s education course via phone within 75 days from the date your case was filed. The 341 hearing is sometimes referred to as the meeting of creditors because your creditors can attend the meeting and ask you questions about the information contained in your petition.