Massachusetts Bankruptcy Lawyer » means testing

New income guidelines for Bankruptcy filers

Administrator — Tue, 19 Oct 2010 14:55:47 +0000

New median household income figures based on U.S. Census information will take effect and apply to cases filed after November 1, 2010. Depending on household size, this could make qualifying for Chapter 7 relief easier for some while forcing certain households into means testing. A single-person household in Massachusetts will see their income limit increase slightly, potentially allowing more people in this situation to qualify for bankruptcy. However, two-person households will see their income limit drop, meaning certain households, especially with two working adults, may be forced into means testing. Household income levels have increased slightly for households of more than two people.

Means testing

Administrator — Fri, 11 Dec 2009 21:23:13 +0000

After the 2005 changes in bankruptcy law, many potential debtors have been concerned about not qualifying for a Chapter 7 discharge because of a high level of household income. While the median household income levels are an initial hurdle to be overcome in the process of discharging debts, means testing is an available option for families to avoid the presumption of abuse that would otherwise exist. Part V of the Chapter 7 statement of current monthly income and means-test calculation is the calculation of deductions from income and is the primary way for the higher-income debtor to qualify for discharge. Subpart A under this section are allowable federal tax deductions. These include national standards for food, clothing and other items and health care based on age seniority. The local standards under the tax deductions would include housing and utilities and non-mortgage, mortgage and rent expenses; transportation and vehicle operation/public transportation expense and transportation ownership/lease expenses for all vehicles operated by debtors. Even if you don’t pay a car loan, you would still have transportation expenses for gas, maintenance and insurance. The other necessary expenses under this subpart would be taxes; involuntary deduction for employment; life insurance; court-ordered payments; education for employment or for a physically or mentally challenged child; childcare; health care and telecommunication services. The last category would only be telephone or internet to the extent necessary for your health or welfare or that of your dependents. Subpart B of additional living expense deductions would include health insurance, disability insurance and health savings account expenses; continued contributions to the care of household or family members; protection against family violence; home energy costs; education expenses for dependent children less than 18; additional food and clothing expenses and continued charitable contributions while Subpart C of deductions for debt payment would include future payments on secured claims, other payments on secured claims and payments on prepetition priority claims. The last category includes the domestic support obligations of child support and alimony trustees usually ask debtors about at the creditors’ meeting. The total deductions from income in Subpart D allows the debtor to overcome the presumption of abuse even with an over-median level household income. Particularly when it comes to the median household income levels in your area as well as the local standards used for tax deductions, consulting with a qualified bankruptcy practitioner in your jurisdiction is vital.

Chapter 7 Means Test

Administrator — Mon, 02 Nov 2009 20:05:39 +0000

The U.S. Trustee Program has issued revised Census Bureau data to be applied to cases filed on or after November 1, 2009. This means that median income level amounts have changed and might allow debtors who might not have qualified for Chapter 7 relief before to be put through means testing. Means testing allows over-median household income debtors to receive a Chapter 7 discharge of debts. Deductions are made from the debtor’s gross income amount for living expenses; health care based on the number of senior citizens (age 65 or older) and non-insurance expenses; housing including both mortgage/rent and non-mortgage utilities and maintenance expenses; car operating and ownership/lease expenses; taxes and health insurance.