John P. Gustafson
Standing Chapter
13 Trustee
(419) 255-0675

(This booklet is also available in downloadable and printable Adobe PDF format. Click here to download!)

MEMO TO CHAPTER

13 PRACTITIONERS

Date:   9/28/06

To:      All Chapter 13 Attorneys

From:  Anthony B. DiSalle, Standing Chapter 13 Trustee

Re:      Newsletter On Post-BAPCPA Practice Issues.

Some Tips On Filling Out The Means Test

► Parts I, II, and VII of the “Means Test” [a.k.a. Form B22C] MUST be completed by ALL DEBTORS.  All Debtors are also required to sign the B22C verification.  Be sure that you have each Debtor’s original “wet signature” in your file for the Means Test.

► The Means Test must be filled out completely and accurately.  Do not “stop” putting in valid deductions just because you have reached a negative number.

► Read the instructions for each line/question on Form B22C.  Many mistakes are being made by Debtors’ attorneys who are not reading the instructions for each item of financial information that is being requested.

► At this point, the case law supports the position that Debtors cannot claim an “ownership” expense for owned real estate not subject to a mortgage [Line 25B deduction], or a motor vehicle not subject to a debt secured by a valid lien [Line 28 and 29 deduction].  Debtors can still take the housing and utilities deduction [Line 25A] and vehicle operation expenses [Line 27] even if the Debtors own their home and/or vehicle(s) free and clear..

► There is no double counting – the deductions on Line 25B and Lines 28 and 29 must be reduced by the amount of the mortgage or car loan payment.  Those secured debt payments can be deducted, in full, on Line 47.  Be sure to calculate loans that have remaining repayment periods of less than 60 months over a full 60 month period.  You can’t just plug in the regular monthly payment where the loan’s term has less than 60 months to go at filing.

► When the form says “divided by 60”, you need to divide by 60 before entering the number.

► Additional food and clothing expenses up to 5% may be claimed.  But, if they are, you MUST include documentation demonstrating that the amount is reasonable and necessary.  Do NOT claim this deduction without complying with the documentation requirement.

► It appears that Line 47 is the proper place to put real estate tax payment obligations that are not included as part of the Debtor’s mortgage payment.

► If you are taking a deduction on Line 54 for child support payments expended for the support of the child, the same amount needs to be reflected on Line 7.  Child support and spousal support should be listed on Line 7, not Line 9.

► The Chapter 13 administrative expense number used in Line 50 is NOT 10%.  It is currently 8% for Means Test purposes.  The current number will be listed on the U.S. Trustee website:  http://www.usdoj.gov/ust/

Providing The Chapter 13 Trustee The Most Recent Federal Tax Return

BAPCPA has two separate tax return requirements.  First, the most recent filed federal tax return (or IRS transcript) must be provided to the Chapter 13 Trustee at least 7 days before the first meeting of creditors.  See, §521(e)(2)(A)(i).  That means that if the Debtors last filed a federal tax return in 2003, they need to provide the Chapter 13 Trustee’s Office with the 2003 federal return to meet that requirement.  This deadline should not be missed simply because returns have not yet been filed for the most recent tax year.

A hard copy of the federal tax return or IRS tax transcript should be mailed directly to the Chapter 13 Trustee’s Office.  Do not send copies of returns to the lockbox address.  Do not e-mail the returns.  Do not file a copy of the return with the Court.

The requirement is that the Debtor provide the Chapter 13 Trustee with a copy of the actual federal tax return or an IRS tax transcript.  A “recap” from the Debtor’s accountant does not meet that requirement.  Nor does a “statement” by the Debtor.

If a Debtor is not currently required to file federal tax returns, a properly executed affidavit stating that fact is sufficient.

If the most recent tax return is not provided on a timely basis, the Chapter 13 Trustee may file a motion to dismiss the Chapter 13 case, and may not go forward and hold the first meeting of creditors.

The second tax return requirement is that the Debtors have filed all required tax returns for the previous four years.  §1308.  “All” means all federal, state and local returns.  These returns are supposed to be filed with the appropriate taxing authorities at least one day before the first meeting of creditors.  If they are not, the Chapter 13 Trustee will continue to the first meeting of creditors to allow the filing of the missing returns.  All the required returns MUST be filed within 120 days after the first meeting of creditors or the Chapter 13 Trustee will move to dismiss the case.

Adequate Protection Payments Are To Be Paid Directly By The Debtor

Section 1326(a) states that the debtor shall provide the trustee with evidence of the amount and date of the adequate protection payments.

            At this time, no set formula for determining the presumptive amount of Section 1326(a)(1) adequate payments has been adopted by the Court.

Payments MUST Commence Within 30 Days Of The Filing Of The Petition

            Section 1326(a)(1) now states that: “the debtor shall commence making payments not later than 30 days after the filing of the plan or of the order for relief, whichever is earlier….”  In a case originally filed as a Chapter 13, that means payments begin within 30 days of filing.  In a converted case, it is 30 days from the date of the Order converting the case because that constitutes a new “Order for Relief”.  Please be sure your clients know the date by which Chapter 13 payments must commence.  CHAPTER 13 PAYMENTS MUST BE MADE TO THE LOCKBOX IN CINCINNATI.

Chapter 13 Domestic Support Obligations Requirements

            Under BAPCPA, it is very important that debtor’s counsel put any “DSO” claims – claims for alimony, maintenance, or support – on Schedule E with a good address.  The Chapter 13 Trustee MUST be given the correct name, address and telephone number of any and all DSO claimants.  Some attorneys are putting that information in the Chapter 13 Plan.  You can also e-mailed the telephone number and other required information to the Chapter 13 Trustee’s Office at dso@ameritech.net.  Please provide this information before the first meeting of creditors for cases with a DSO claim.   The BAPCPA requires the Chapter 13 Trustee to send notices, within 3 days after the §341 meeting, to both the DSO claimant and the state child support enforcement agency (even when the DSO claim is for alimony).

Bifurcated Motor Vehicle Loans

If the Chapter 13 Plan proposes to bifurcate a motor vehicle loan, the Plan should indicate whether the loan in question is, or is not, a “910 vehicle loan” entitled to protection under the “hanging paragraph” of §1325(a).

Accuracy And Completeness Of The Employer Addresses On Schedule I

In completing Schedule I, please be sure that the employer address is complete and accurate.  This will assist us in implementing a payroll deduction, if that is requested.

Thank you for taking the time to read this Memo!  If you have any questions, comments or concerns regarding anything in this Memo, please let us know.

Important Notice: This web site is provided with the understanding that the Chapter 13 Trustee's Office is not engaged in rendering legal, accounting, or other professional services.  If legal advice or other expert assistance is required, the services of a competent person should be sought.

Copyright © 2007 Chapter 13 Trustee