February 2, 2015 By:
If your income is more than the median income, then the next step is to look at your expenses.
But it’s not as simple as just looking at your actual expenses. Realize that the point of the means test is to not allow people who have the means to pay a meaningful amount of their debt to just write off all their debts in a Chapter 7 case. So in its attempt to meet this purpose, Congress tried to come up with a more objective way to determine people’s allowable expenses. Frankly, Congress didn’t trust people to just make a list of their expenses, thinking they would inflate them to show they had no money left over to pay their creditors.
So in its attempt to find a more objective or truthful list of expenses, Congress put together a system based on a combination of some standardized expenses along with some of your actual expenses.
The standard expenses get complicated because some are based on national standards and some on local ones. The national standards include food/clothing/housekeeping expenses and out-of-pocket health care costs. The local
standards can either be based on your county — such as housing and utility expenses — or on your “Metropolitan Statistical Area/Census Region” — such as vehicle and other transportation expenses.
Your actual expenses are allowed — although often with limitations and/or only with appropriate documentation — for certain taxes, term life insurance, involuntary payroll deductions, child and spousal support and other court-ordered payments, childcare, educational expenses for children under 18 years, and charitable contributions. You can also ask for a higher allowance than the standard amounts for food, clothing and home energy, while demonstrating why the higher amounts are reasonable and necessary.
Three more steps:
As is clear from this blog and the one just before, there are a number of ways to meet the means test, but it can be an awkward, complex task. This is not a do-it-yourself project. f you are in the Dallas-Fort Worth metroplex, let Attorney Carrie Weir show you how the means test is applied to your unique, personal situation. Please schedule a no-obligation, free, confidential consultation with us by calling 972-772-3083 or contacting us here .