Special “Means Test” Challenges and Opportunities: Filing Quickly If Your Income Is Increasing

Man on phone with bill collector You must pass the means test to qualify for Chapter 7 “straight bankruptcy.” Otherwise you would likely end up in the much more time-consuming and expensive Chapter 13 “adjustment of debts.” Chapter 13 is great if you need its benefits, but not if you are forced into it and would prefer the much simpler fresh financial start of Chapter 7.

Our last three blog posts have been about the means test, so please look back at them for helpful background information — especially at “A Summary of the Means Test” at the beginning of the most recent one. (See these recent blog posts by clicking on “BLOG” in the navigational bar above.)

Taking Advantage of the Peculiar Definition of “Income” in the Means Test

At the heart of the means test for our purposes here is the odd and very precise way it defines “income.” Understanding this definition enables us to use it to your benefit for passing the means test. As stated in our most recent blog post, “income”

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.

So the means test does not count as “income” the money you received during the month that your bankruptcy case is filed. For example, if your case is filed on July 15, whatever money you receive from July 1 through July 15 is not counted. Also, any future anticipated money is also not counted — in the above example, any money received on or after July 16 is not counted either.

These limitations on the definition of “income” can benefit you in the following scenarios.

Lump Sum Just Received or About to Be Received

If in the last few days you have received an unusual sum of money, or expect to do so shortly, you should consider seeing an attorney about filing for bankruptcy right away. That lump sum payment may push your “income” above the published median income for your state and family size , but only if that lump sum is counted. It would not be counted if you filed for bankruptcy either during the same calendar month that you received that lump sum, or even before you received it.

Anticipated Increase in IncomeM

Your income in the last six months may have been below the median income for your state and family size — for example, if you were unemployed during parts of that six-month period — but you may expect an increase in income soon — if you are about to start a new job or one that pays more. If this applies to you, you should consider seeing an attorney about filing for bankruptcy right away, before the increased income starts being counted for the means test.

Recent Increase in Income

Even if you have already started a new job or one with a higher income, it may not be too late to pass the means test. Because “income” is measured based on the last six full calendar months — essentially an averaging of money you received during that period — a higher “income” during the last few months may well be sufficiently offset by the lower income of the first few months of that six-month period.


I Firm 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. Acting quickly can be crucial, so please call us at 972-772-3083 , or use this form to contact me today.

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