The Means Test: What Are Necessary Telecommunication Expenses?

18 Oct The Means Test: What Are Necessary Telecommunication Expenses?

Post-October 2005, above-median debtors now have to complete a “means” analysis (more commonly known as the “Means Test”) to determine whether there is a presumption of abuse if they file a Chapter 7. Nearly the same analysis is performed in a Chapter 13 (but now magically transformed into the Disposable Income analysis.) The end result after deducting lots of Congressionally-mandated expenses determines whether a debtor can file a Chapter 7 or what they must pay in a Chapter 13. One of the expenses is a deduction for “telecommunication expenses” necessary for the health and welfare of the debtor and his dependents. What on earth does that mean? The only thing we know for sure is what it DOESN’T mean: basic landline telephone service (it says that on the form). The rest of the “telecommunication expenses” are subject to local judicial interpretation.

Telecommunication expenses could be cellular phone service necessary for the debtor/family to communicate. It could be the costs of “call-waiting”, “call-forwarding”, long distance service, the charges for being unlisted. Telecommunication expenses could include the cable television service, internet service or a satellite service. (In some parts of the country those are also calculated as utility costs; in other parts, there is no way a judge would allow satellite/cable to be considered a utility as it is considered recreational in that area.)

Telecommunication expenses could include the costs of personal computers for use by debtors or their dependents to achieve education, work-related training, etc.

Whatever the expense is or how it is calculated, the debtor must be prepared to back up their statement on the Form 22 that this expense is necessary for the health and welfare of the debtor and/or his dependents.

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I'm a consumer protection lawyer in Oregon, working with people in Klamath; Lake; Jackson; Josephine; Curry; and Deschutes County. I speak regularly on bankruptcy and consumer protection issues nationwide.
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