How to file bankruptcy – number 6 of a series – the Means Test

16 Mar How to file bankruptcy – number 6 of a series – the Means Test

Every individual who files a bankruptcy case must file a means test form. It doesn’t even matter if you are exempt from the means test, you still have to fill out the form. It’s complicated. (I thought that was only for relationships on Facebook – maybe not).

Why? You have to prove to the satisfaction of the wise people who wrote the Bankruptcy Code that your chapter 7 case is not presumed to be an abuse. By the way, even if you do pass the means test, your bankruptcy case could still be dismissed if the wise people at the United States Trustee’s office decide that your case is an abuse under the “totality of circumstances” rule.

See how simple bankruptcy is?

Anyway, the first thing you’ll need to complete the means test is to collect your pay stubs for the past 6 months. And if you received any other income during that time, you’ll have to show some proof of that too. If you run your own business, you’ll need to show your gross income and figure out all your business expenses so that you can figure out your net income for each ofthe past 6 months.

Why is this important – well you need to establish your “current monthly income” which is neither current nor monthly. Huh? Actually, it’s the average of your income for the past 6 months. This is then multiplied by 12 and compared to the median income for families your size in our state. What’s median? That’s the income which level at which 1/2 of the people are above and 1/2 of the people are below.

It’s so simple, you can almost do it yourself. But you probably will want a lawyer to help you. I mean, I generally like the idea of a mechanic fixing my brakes – maybe I can do it myself, but I really want my car to stop perfectly every time.

Anyway, that gets us to just the beginning of the Means Test form B22A. It’s going to take us quite a few more days to tell you all about the rest of the form. Stay tuned!

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Jay S. Fleischman is a bankruptcy lawyer with offices in Los Angeles and New York. He can often be found on Google+ and Twitter, where he shares information about consumer protection issues and personal finance.

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