楊清泉律師專欄：MEANS TEST MISSTATEMENTS MAY BE PROOF OF FRAUDULENT INTENT (一)

The means test is the IRS based form of calculating disposable income in bankruptcy to determine if the case should be a Chapter 7 or Chapter 13; and if a Chapter 13, how long the commitment period should be. In addition to the means test, there is the schedule I which is now in the new very detailed format which came out last month that calculates debtor’s gross and net monthly income, and schedule J which is also in the new very detailed format that calculates debtor’s total monthly expense. Although the means test and the combined I and J calculate debtor’s disposable monthly income, the end result is not always the same amount. For instance, the means test may yield a negative disposable income, while I and J may be positive $500 a month for the same debtor! In this situation, debtor is well-advised to file a Chapter 13, instead of a Chapter 7, because the fact that there is disposable income in I and J may lead to a US Trustee motion to dismiss your Chapter 7 case, or convert to Chapter 13 based on bad faith if the disposable income is enough to pay at least say, 10% of your unsecured debt.

Be careful in calculating your means test because misstatements in the means test may be deemed a false oath by the court. And a false oath can lead to a denial of discharge!

In Re Gandy, when the debtor filed for Chapter 13 relief, he said he was single, had two dependents, a 48-year-old “Live-in Wife/Girlfriend,” a disabled 27-year-old son, and worked as a car salesman with a monthly income of $2,801. According to the means test he had a current monthly income of $4,333, which was below the applicable median income. The debtor subsequently filed an amended Schedule I in which he changed his marital status from single to married but made no other revisions. Two years after he filed for bankruptcy, the debtor converted his case to Chapter 7 in response to the trustee’s motion to dismiss. With the conversion to Chapter 7, debtor said he was unmarried, and had a monthly income of $4,333. The plaintiff filed a complaint against the debtor asserting that his discharge should be denied because he knowingly and fraudulently filed a false Chapter 13 statement of current monthly income, a false Chapter 7 statement of current monthly income and a false schedule I. The debtor responded by filing amended Chapter 13 schedules, which showed a current monthly income of $4,689, which resulted in annualized figure greater than the applicable median income. This doesn’t pass the smell test at this point.

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