Part One: Kinds Of Income Reported In Bankruptcy; Introduction Part One

11 May Part One: Kinds Of Income Reported In Bankruptcy; Introduction Part One


There are three different types of income and expenses reported in all bankruptcy petitions, whether Chapter 7 or Chapter 13 is filed.

I call them True, Projected, and CMI also known as Means Test Income.

True income and projected income have always been required to be contained in bankruptcy petitions. They reflect what is actually happening with a debtor’s spending.

The Courts reviewed them to determine if someone was able to repay some, or all, of their debts. A Trustee or Judge would review a filed budget to determine if the expenses claimed were reasonable, but left no discretionary funds which could result in a meaningful payback to the debtor’s creditors. In other words, a Judge might tell someone they couldn’t walk away from their debts and keep a luxury boat, extra car, or pay for spa treatments monthly, but they might find that someone who had to spend more money for gasoline due to a long commute, maintain three cars because both parents worked and the kids had to get to and from school, or tutoring a child who needed some extra help in school could be discharged from debt.

The 2005 bankruptcy changes added a new type of reporting requirement calledCMI. This was done because apparently the government was convinced that the actual numbers didn’t tell the whole story or that they felt that people were getting away with something. So they came up with a formula, and CMI is one part of the new formula called the Means Test that is used to determine if the government thinks that you have, or should have, the means to repay your debts.

Under the 2005 changes, your real wages are looked at and your actual budget scrutinized, but you are also held to a fictitious standard of spending that probably has little relevance to your family’s true financial needs. Unfortunately, there is little room for adjustment to the means test, except in special circumstances. It isn’t enough to be able to prove that a family does spend more, they are held to some bare bones deductions for the Means Test calculations.

See also: Part Two: Kinds Of Income Reported In Bankruptcy; What Is True Income?

See also: Part Three: Kinds Of Income Reported In Bankruptcy; What Is Projected Income?

See also: Part Four: Kinds Of Income Reported In Bankruptcy; What Is CMI, Also Known As Means Test Income?

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Concentrating in Consumer Bankruptcy Law since 1988; Wake Forest Law School JD 1987 Law Office of Susanne M. Robicsek since 1993, Law Clerk to Judge Rufus Reynolds, US Bankruptcy Judge for Middle District of NC; Burns Price & Arneke, PA, David Badger and Associates, PA.

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