What Does Your Attorney Need For Your “Means Test” Analysis?

06 Oct What Does Your Attorney Need For Your “Means Test” Analysis?

When Congress changed the U.S. Bankruptcy Code in 2005, a new process was put into place. This process is called the “means” test. There really is no such formal name, but that’s what folks have been calling it. The “Means Test” is supposed to be an analysis of your income over the past six months with the end result supposed to determine whether or not you have the “means” to pay back a portion of your bills in a Chapter 13 filing, or whether you should be allowed to proceed in Chapter 7.  What does your attorney need? The attorney inputs data from all sources of income over the six-month period ending on the last day of the month prior to filing. So, if you filed for bankruptcy on October 6, 2007, the attorney will be looking at income from April 1 through September 30, 2007. After many calculations, a number called Current Monthly Income is arrived at and that number is compared to the state’s median income and debtor’s household size to determine whether or not the debtor belongs in Chapter 7 or Chapter 13.

Income is income, right? Nope. Social security payments or payments that are funded through the social security act (which covers foster care, adoption subsidies, Aid to Children and Families (TANF) etc.) is not considered income. Tax refunds are not income. Pension payments are income. Disability retirement (military or otherwise) is income. Your attorney will need to look at each and every paystub, every award letter, any piece of documentation you get for money received. For self-employed people, the attorney will be looking at income received and expenses going out in order to determine the appropriate income for each month. Gifts from family are not income, but insurance proceeds or payouts are.

Your attorney needs as much information as they can get from you and then some. The form that Congress mandated for the “means” test is a 7 page form and each line involves numerous calculations in order to make sure the right data is put on the form.

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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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