Unemployment Not Included In Means Test Income

22 Oct Unemployment Not Included In Means Test Income

The first step of the Means Test is to compute the average monthly income for debtor and live-in spouse for the past six full months before a bankruptcy filing and see if that is greater than the median income for the debtor’s household size. Such income is defined as excluding benefits received under the Social Security Act. Unemployment benefits are received under the Act but are not direct Social Security benefits, so the official form designers “punted” and allowed the debtor or counsel to disclose it as Social Security or non-Social Security income.

A recent Massachusetts bankruptcy decision ruled that unemployment benefits are Social Security benefits and therefore not countable income. In re Munger. 370 B.R. 21 (Bankr D MA 2007) (Rosenthal, J). This decision has widespread implications, since foster care, day care, and adoption subsidies as well as most forms of welfare (but not Food Stamps) are similar benefits nder the Social Security Act (although most recipients might not have to worry about having above-median income).

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L. Jed Berliner practices exclusively in consumer bankruptcy, foreclosure defense, and related consumer protection litigation such as credit card defenses and suing debt collectors. He established his Springfield, MA practice in 1988. Attorney Berliner is a regular and active contributor to the Bankruptcy Law Network, the Bankruptcy Roundtable, and the National Association of Consumer Bankruptcy Attorneys, three specialized consumer bankruptcy forums on the Internet, and is an informal mentor to regional practitioners. He is recognized by his peers as an expert in consumer bankruptcy issues. He thoroughly enjoys being rated "excellent" in his client surveys.

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