We are frequently contacted by prospective clients who have done some online research about bankruptcy and have reached their own determination about whether they pass the “means test” and are therefore eligible for Chapter 7 relief. While we always welcome clients who have done this kind of research, oftentimes the information they have relied upon to make this determination is not complete. For example, clients are unaware that although social security income is not included on the means test, it is included on the Schedule I and J budget, and in many cases, clients who technically pass the means test show an obvious ability to repay their creditors back. In such cases, the US Trustee can still oppose the bankruptcy filing. In other cases, clients pass the means test solely because of high mortgage payments or high car payments, and if this is the only reason they are passing, the US Trustee can also oppose the filing.
In my experience, it is generally not the means test that is the problem in a particular filing. Rather, it is the client’s actual budget or their debt load. We have seen many instances in which the client passes the means test yet still needs to file chapter 13 because of a potential US Trustee objection over high discretionary expenses or unsecured debt that will certainly draw attention to the filing. The major exception to this general rule is for single filers who live alone because the means testing is particularly harsh on single filers. Some of our toughest means testing cases have been for single filers who show a greater ability to repay on the means test than on their actual budget. We have generally been able to find solutions even for these situations though.
If you have specific questions about the means testing as applied to your case, please feel free to send us an email or schedule a free consult.