analysis of the means test

[JimH]

Here is the best analysis of the "means test" I have found to date. It clarifies many of the questions we've been tossing around here for some time.

Enjoy.....http://www.consumerlaw.org/action_ag...Means_Test.pdf

[bkfiler]

no wonder i hire attorneys to do the reading for me!

y a a a a a w w w w w w n.

[StaciMM]

I replied to the last post...

Keep in mind the 'Means Test' is something that came w/ the new laws. Even so, there has always been an assessment of need/insolvency when someone files ch. 7. If your income is over your expenses, so that you could afford to repay some of your debts, ch. 7 is generally not an option. It is everyone's right to file bankruptcy-but they are not guaranteed a blanket discharge. If they're able to pay, the US Trustee steps in and offers a choice between dismissal or conversion to a 13.

[JimH]

no wonder i hire attorneys to do the reading for me!

y a a a a a w w w w w w n.

yeah, but it is full of info

[JimH]

I replied to the last post...

Keep in mind the 'Means Test' is something that came w/ the new laws. Even so, there has always been an assessment of need/insolvency when someone files ch. 7. If your income is over your expenses, so that you could afford to repay some of your debts, ch. 7 is generally not an option. It is everyone's right to file bankruptcy-but they are not guaranteed a blanket discharge. If they're able to pay, the US Trustee steps in and offers a choice between dismissal or conversion to a 13.

What you are saying is addressed in the link above.

[SinkingFast]

Our situation is a little odd in that we have rent payment AND a mortgage payment. In addition, we pay about $500 more/month for rent than the allowable for our family size and area. I didn't think either of those issues would be addressed in the Means Test but they are. An attny told us there are multiple "passes" in the Means Test. He said while we might have presumption arise in the first pass, once they progressed farther, we should have no problem at all with the Means Test. At some point, we'd get to factor in what we really pay for rent and add in what we pay on our Mortgage payment as well.

Sounded kinda like filing Income Tax to me. Work along adding entries in the appropriate spots until you stop on one line, and take a side jaunt. Make a bunch of entries that you add/subtract/multiply by some mysterious factor/whatever, then bring back in the number from the line where you stopped, compare and do what ever the instructions tell you to do.

[FoolAndHisMoney]

Our situation is a little odd in that we have rent payment AND a mortgage payment. In addition, we pay about $500 more/month for rent than the allowable for our family size and area. I didn't think either of those issues would be addressed in the Means Test but they are. An attny told us there are multiple "passes" in the Means Test. He said while we might have presumption arise in the first pass, once they progressed farther, we should have no problem at all with the Means Test. At some point, we'd get to factor in what we really pay for rent and add in what we pay on our Mortgage payment as well.

Sounded kinda like filing Income Tax to me. Work along adding entries in the appropriate spots until you stop on one line, and take a side jaunt. Make a bunch of entries that you add/subtract/multiply by some mysterious factor/whatever, then bring back in the number from the line where you stopped, compare and do what ever the instructions tell you to do.

If you don't mind me asking why do you have a rent & mortgage payment? Your lawyer said that they are both allowed?

[JimH]

Sinkingfast,

If I remember correctly from your other posts, you are going to bk on your previous home. You would only be factoring in your rent payment. The means test is based on after bk expenses only.

[SinkingFast]

Hubby was laid off from his previous job. When he did secure new employment, it was outa state. He's been here a year. The rest of the family moved here in the summer. The house in the old state hasn't sold, and all the while we've kept making our mortgage payments.

[FoolAndHisMoney]

Hubby was laid off from his previous job. When he did secure new employment, it was outa state. He's been here a year. The rest of the family moved here in the summer. The house in the old state hasn't sold, and all the while we've kept making our mortgage payments.

Oh. Hope all works out for you. Good luck

[FoolAndHisMoney]

Thanks JimH! I actually read it several times to understand some of the legal wording in it. I now think I understand the whole spouse thing as well as significant other thing. Looks like the law does not apply any significant other's income, it only defines actual families. If you are married and do not file jointly it only counts your spouses income for the purposes of calculating the median income. On lines 17 & 18 it lets you remove your spouses income to continue the test. If you are married and do file jointly then you must take the entire test with both incomes.

Of course please don't anyone go by what I got out of this. Ask your lawyers to be sure.

[bkfiler]

keep working at it foolandhiscash, we got to understand these new crappy laws. thanks!

[FoolAndHisMoney]

keep working at it foolandhiscash, we got to understand these new crappy laws. thanks!

You got it bk! My name doesn't really fit me very well. It should be BIGFOOLandNOMONEY!!

[LostOne0069]

I'm confused here.... This document talks about the "safe harbor" and the "means test" etc. etc. but then someone says there's still a "needs/insolvency" test etc. etc.

If my income is below the median for the state... is there still more that I have to go through in order to be able to file Chapter 7? I looked at those IRS tables and I don't see how you could be anywhere near those expense levels and NOT be below the median income.

If you still have to fit those tables to file Chapter 7, I guess I'm not sure what purpose the median income rule serves.

[bkfiler]

you take a means test to see if you qualify for chap 7.

if you are under that amount then you will have to make sure you dont have excess income (disposable income) over an amount that would allow you to pay back your creditors a certain portion.

usually at least $100 or more.

as far at those tables based on the median levels, i have not looked at them enough to give you an answer on that. it gets trickier then youd imagine. also those tables dont represent everything you could claim as expenses. its just trying to limit the main categories.