Means Test Form Wrong For Marital Adjustment

27 Dec Means Test Form Wrong For Marital Adjustment

Chapter 7 debtors, married but filing alone, may be harmed by the required but incorrect Means Test form. The form ignores the Marital Adjustment when comparing “Current Monthly Income” to median income and might unlawfully disqualify a debtor from Chapter 7 protections.

The Means Test begins by comparing a debtor’s Current Monthly Income to median income. If it is higher, then the remaining Means Test calculations are required and a debtor might be disqualified from Chapter 7 relief. If Current Monthly Income is lower than median income, then there are no more required calculations.

Current Monthly Income does not include a nondebtor spouse’s income used for the nondebtor’s separate expenses (child support, separate tax obligations, etc.).Despite this definition from the Bankruptcy Code, Form B22A (used for Chapter 7 means test calculations) compels inclusion of all of the nondebtor spouse’s income – without subtraction of the nondebtor’s separate expenses – into the debtor’s Current Monthly Income before comparison with median income. This is the result of placing the Marital Adjustment at Line 17, after the comparison with median income takes place.

The Chapter 13 B22C Form does not have this error. It places the Marital Adjustment at Line 19 but before the comparison with median income, and allows a below-median-income Chapter 13 debtor to avoid the remaining Means Test calculations and an unrealistic payment requirement.

Astute counsel will be aware of this error and advocate accordingly.

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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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