How Can You Get Around the Bankruptcy Means Test?
The bankruptcy means test can really ruin a person’s day. Every now and then, I meet with a high income potential Georgia bankruptcy client who ends up with a means test number that just won’t work in reality.
Usually, this person will come into my office who had a friend that recently filed bankruptcy with me (referrals are the largest source of my business). The friend’s case went perfect and everything ended happily. In contrast, this high income debtor gets stuck with a number at the end of the means that will never work. I hate it when that happens.
I wish I could tell you that the means test was completely logical. Its not. Instead, its a product of politics and we are stuck with it. As a consequence, you generally cannot get around the bankruptcy means test.
However, there are exceptions. For example, let’s say you received a one time bonus payment within the last six months. If this bonus payment significantly increases your average income for the six month period prior to filing, we may be able to argue that since you will most likely never receive this type of bonus again, it should not be taken into consideration.
Another example of an exception is when a debtor received double pay while he worked in Iraq. I had a client from Rome, Georgia who spent some time driving a truck in Iraq. The reason his employer paid him double was because of the danger. When he returned to Rome, Georgia his income was cut in half. As a consequence, the trustee allowed this fact to be taken into consideration.
A third example of a possible way to deal with a bad means test number is to consider exceptional medical costs. In one case, I had a bankruptcy debtor from Dalton, Georgia who suffered from diabetes. Her monthly cost for insulin and strips were over $400 per month. When we factored this in at the end of the means, we were able to come up with a Chapter 13 plan that worked for her.
I sometimes meet with clients who come into my office expecting me to give them horrible news because they filled out some online bankruptcy means test. In almost every case, they forgot to enter child support or daycare expenses into the equation. My point is that you should not rely on some internet program to tell you whether or not a Chapter 13 plan will work for you.
Instead, you should meet with a bankruptcy attorney. Allow them to look at your entire financial situation and then you will know whether or not the means test will allow either a Chapter 13 or Chapter 7 bankruptcy to work for you.