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Live at home with parents?


N7SC
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I need to file a chapter 7, am over 21, and live at home with my parents. The total household income, including my parents', is low enough to easily qualify me for chapter 7. But I have a question:

In filling out the form 22A, for the income and means test, do I stop at the end of Part III? Even if I include my parents' income I certainly qualify. Or, since I live with my parents, rent-free, do I have to complete the rest of the whole form and declare that the free lodging is equivalent to some kind of income for me?

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I don't know ANYTHING about BK, but it seems like it would be a good idea to have them write you a lease as if you're renting a room, and DON'T include their income.

From what I understand, the higher your expenses are the more likely you'd get a BK. Living at home doesn't sound compelling for needing a BK since any and all income is disposable.

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I don't know ANYTHING about BK, but it seems like it would be a good idea to have them write you a lease as if you're renting a room, and DON'T include their income.

From what I understand, the higher your expenses are the more likely you'd get a BK. Living at home doesn't sound compelling for needing a BK since any and all income is disposable.

From a conversation with a bankruptcy attorney, I would have to include my parents' income, but that still does not cause a problem as my income combined with theirs is still low enough to qualify for a chapter 7 without having to do the whole means test.

Further, my income is not all disposable: Due to my work hours, which vary, I only eat dinner at home four or five nights a week, the rest I pay for. I buy my own lunch 5 days a week, and sometimes breakfast too. I buy my own clothes, shoes, some of my grooming supplies, etc. Some months this all actually costs more than I make. And, although they haven't needed it yet, I will willingly help out my parents if they need to borrow a few hundred $$ to make it through a month.

What I would like to know, without having to pay the high fees attorneys charge, is what complexities arise from my situation. The forms for bankruptcy seem to all be geared to debtors who live on their own or with spouses. I do have an appointment with an attorney who may help, but I can only just barely afford it. The jam here is that I need to file to get a creditor off of my back, but can't really afford the high cost of having an attorney handle the whole filing for me.

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seems like it would be a good idea to have them write you a lease as if you're renting a room, and DON'T include their income.

Yeah... that would be a BAD idea. ALL HOUSEHOLD INCOME must be included. Writing up a lease at this point wouldn't work well because you have no proof whatsoever that you've been paying rent.

You do NOT want to attempt a bk under the current laws without an attorney, there are too many things that can jump up and bite you and either get your case dismissed, or worse, get you charged with bankruptcy fraud. While bk attorney fees are expensive, it IS worth it to have a knowledgeable attorney doing this for you.

All those expenses you listed are valid expenses. Even the money you give your parents might be valid as payment in lieu of rent.

If you are still paying creditors - stop, except for a car payment if you have one. There's no point in throwing your money away paying creditors you're going to include in your bankruptcy.

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  • 3 weeks later...

FWIW, I had a paid appointment with a bankruptcy attorney to help sort out the original question I posted, above. Here is what the attorney said, hopefully to help someone in the future:

Because we pool our income to support the whole household, do as follows:

On the Form 22A, for the Means Test - Show my gross income, and then, on Line 10 a, bring in my Parents' gross income. Since we are below the limit for the means test even with everyone's income included, stop right there. In our district, the attorney said, that is all it takes.

On Schedule I (income), enter my gross, deduct my taxes (I have no other deductions) to get my net, then, on line 13, bring in my Parents' NET income, to arrive at the household's average monthly income.

On Schedule J (Expenditures), list all household expenditures, including my student loan payments, my parents' credit card payments, their mortgage, etc.

It all makes sense to do it this way because we really do pool our funds, and we'd never be able to make it otherwise. It provides the court and trustee with full disclosure of everything and makes it clear that this is not an abusive filing.

Actually, it wound up being pretty scary when we saw just how close to the edge we live. We really don't wind up with much or any disposable income.

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  • 2 weeks later...

Wait a minute, I don't think you have to include ALL their incomes. If I'm correct, the language reads something like, "...income of household members paid to support the debtor's household.."

I think that means only that part of their income going to support your overall household.

For example, if one of your household members makes 15K over 6 months, you don't include all 15K, but rather whatever portion they use to pay for your housing and utilities.

FWIW, this Friday I have an initial consultation with a lawyer, as I want to get clarification on this....

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