Means Test Question

[hocus]

I saw a lawyer for the first time this morning. I am right on the border between a 7 and a 13. After I left, I realized that I am not clear on the means test. I have to go 3 months without charging anything. I can do that. The means test for my state is about 39,000. Is that before or after taxes?

I assumed that she meant gross income, but she kept talking about take home pay. The gross would force me to file a Chapter 13, but the net will let me file a 7.

Thanks for answering.

[jal1129]

The means test deals with gross income. If you are close on the income is there any way you can lower your income over the next couple of months to come in under the median? For instance stop working over time, quit a second job etc?

[JollyGG]

The median is based on your gross income. However, the first thing subtracted out on the means test are the various thing taken out of your paycheck making it so you are essentially dealing with net pay for the means test.

So you may still qualify for a 7 if you are above the median. If your gross is above the median you go onto the means test where your gross income is taken, payroll deductions are subtracted, then IRS allowances for things like food shelter, clothing, ect is taken out. Then some of those IRS allowances are corrected for what you actually pay for example on a car or home (occasionally documented medical expenses). If your disposable income after all this is 100 or less you qualify for a 7. If you look under the links thread in the general bankruptcy section there is an online means test there is also a calculator to help you remember all your expenses.

If you are very close to the median a good lawyer can usually get you a 7. If he can't and you need to do a 13 you will still be better off for it. However I did a 7 so don't have as much advise on a 13.

You may also want to look at when you plan to file. We first visited in a lawyer in Sept of last year and we were just barely above the median when new median numbers came out that October we were just barely below. Plus we timed our filing so the six month lookback included a week of unpaid maternity leave and a short paycheck due to a paycycle change at work.