June 10, 2008
Further Thoughts on Kagenveama
I received a call asking me why Ms. Kagenveama's net income from Schedules I and J of $1,500 was so much different than the B22C means test of minus $4. My first thought was that the means test net income is always less when the debtor owns a home and has car payments because the debtor gets the IRS allowance amounts and the secured debt also. But I looked up the debtor's forms to see if that was the case here.
The debtor's I and J showed $2,572 of monthly expenses. If you take away the mortgage payments which include property taxes and insurance and take away the car expense and insurance, the total monthly expenses are about $1,030. The IRS National Standard and the Local Standard - non-mortgage alone allowed the debtor $1,805 so that is almost $800. The IRS auto allowances on the B22C totaled $614 plus the $186 car payment for a total of $900 but the Schedule J totaled only $444 (Schedule J did not have the $186 car payment, apparently an oversight). In addition, the means test allowed deduction of the amount needed to cure the mortgage of $141 per month and a hypothetical payment to the chapter 13 trustee of $84.
Most interesting to me is that the debtor deducted $100 on the means test as cell phone, pager etc "necessary for health and welfare." If the trustee had objected to $10 of this amount, the means test would not have been a negative amount and a five year plan would have been required (although not necessarily at $1,000 per month).
So the answer to the question, why were the amounts different, is primarily that the debtor's monthly personal expenses were less that the means test allowances. Short and sweet - what a concept!
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