Legal Question in Bankruptcy in California
income in a chapter 7 BK
I have lost my husband of 50 years and income as well, lost house, motor home etc. I filed a chapter 7 Bk and passed the means test, However with my pension 800/m his pension I receive 740/m and my social security 1200/m I have a surplus of 280/m and the court wants a chap 13. disposable income is a 280 positive a month. I thought the BK law states that income is from all sources excpet social security as it is protected from court trustees and creditors under the social security act. Is this legal or is the court trustee auditor wrong about the BK law in california. I have worked 50 years for boeing as my husband did, I have lost him, my credit, house everything, I am upsided down on my financial stmts and pass the credit counciling means test, If they do not count my social security payments which I do not think they can I would be -800/m and that would really make me insoulvent. My main question is can the courts use my social security as income? Can you help?
1 Answer from Attorneys
Re: income in a chapter 7 BK
There are several issues here.
First of all, there was no need for you to "take" the means test because your income from "all sources" is less than the median income in California for your family size. The law allows you to exclude social security from this comparison; but in your case, you are under the median even WITH your social security.
The Trustee is using a different part of the law to suggest that after deducting all your reasonably necessary living expenses from your net income (including SS which they are allowed to do in THIS test), there is enough money left over to pay $10,000 to your creditors over the next 3 years.
You need to amend your Schedule J to reflect expenses you may have overlooked so that you DON'T have $280 left over.
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