Special Means Test Challenges and Opportunities: Dealing with a Recent One-Time Bump in Income

Man under stress Our last two blog posts have been about the all-important means test, so please look back at them for helpful background information. (Click on “BLOG” above — just below the top banner picture — and you’ll see our recent blog posts in reverse chronological order down the page.)

A Summary of the Means Test

The means test was designed to prevent people who could afford to pay a meaningful amount of money to their creditors from discharging (legally writing off) their debts with a Chapter 7 “straight bankruptcy case. In effect, people who do not pass the means test must instead deal with their debts by paying as much as they can afford to their creditors over a three-to-five-year period through a Chapter 13 “adjustment of debts case.”

The means test looks at your income first, and then, if necessary, at your allowed expenses. If your income is less than the published median income for your family size in your state , then you pass the means test without needing to go through the expenses side of the test. Most people’s income IS less than their applicable median income, so practically speaking, the income side of the means test ends up being its most important part.

“Income” for purposes of the means test is determined in an unusual and very specific way: it is calculated by combining all income and funds that you received from virtually any sources (except through Social Security) during the last six FULL calendar months before the date you file for bankruptcy and then doubling that amount. DON’T COUNT any money EITHER received during the calendar month in which your case is filed OR received before that block of six calendar months.

Dealing with a One-Time Bump in Income

Because “income” includes money received from just about any source, and because of the oddly timed determination of income, receiving a single unusual chunk of income could push you over your median income threshold. There are three primary options for dealing with such an event.

After first determining that this extra chuck of money will indeed push you over the median income (if you’re still under the median, then the rest of this is does not apply to you), one option is for your bankruptcy case to be filed during the calendar month in which that extra money arrived. This option is explained in detail in our recent blog post titled “Why Every Day Can Make a Difference in Passing the ‘Means Test’.”

But often, by the time you understand the problem created by the arrival of that extra money, the end of that month has come and gone. So the next option is to hold off on filing for bankruptcy long enough until the date you received that extra money is no longer within the pertinent six-calendar-month period and so no longer counts as income for the means test. That delay in filing can be easy when your creditors are not being aggressive, but can be quite difficult if they are. You need the advice of an experienced attorney to create a sound game plan for you about this, and to be available to you as circumstances develop.

The final option is to go ahead and file the bankruptcy case in spite of being over the median income and then passing the means test after going through the expenses side of the test. How the allowed expenses are determined for the test is more complicated than you can imagine — with some expenses you can use your actual expenses (medical and child care), some expenses use published IRS Local Standard Expenses (such as housing and transportation) and others use IRS National Standard Expenses (such as food and clothing). It should be clear that this last option definitely requires the help of a thoroughly knowledgeable bankruptcy attorney.


I can help you by applying the means test to your unique situation and determining the best way to pass it. At a free, no-obligation initial consultation meeting, we will review your options with you. Please call us at 972-772-3083 , or use this form to me today.

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