The bankruptcy means test is a formula used by the bankruptcy courts to assess whether your income exceeds the maximum threshold for filing for a Chapter 7 bankruptcy. It was established with the intent to prevent debtors who may be able to pay some or all of their debts from filing for bankruptcy. If you file for a Chapter 13 bankruptcy, the means test can affect the length of your repayment plan. It’s quite common to make mistakes on the means test, which is why it’s always a good idea to work with a veteran bankruptcy attorney, who can complete this form for you.
Misjudged Household Size
Writing down your household size seems like a straightforward task; however, it’s common to make mistakes in this area. On the means test, your household size is used to assess where your income falls in terms of the median family income, in addition to your standard deduction amounts. Occasionally, a bankruptcy court will accept every member of the household as counting toward the household size. Most of the time, only members that are financially interdependent are included in this figure. For example, if you have someone renting a room in your home, that boarder would not count toward your household size.
Improper Documentation of Income
A number of minor factors can interfere with the way in which your income is documented and whether it matches the figure you include on the means test. For example, your average income may be affected by the issuance date of your paychecks or when you filed the bankruptcy petition. Your attorney can carefully examine your documentation to ensure it matches the income you list.
On the means test, you’ll list expenses that are deductible. A common mistake is to list expenses that are not deductible, such as 401(k) loan repayments and tuition for a child.
When you partner with the team at Cutler & Associates, Ltd., our bankruptcy attorneys will make sure that all of your bankruptcy paperwork is accurate and filed on time. Our bankruptcy attorneys are available in Aurora, Schaumburg, and other convenient locations in the Chicago area.