The Big Lie About the Means Test and Bankruptcy
Some people think that if they are one penny over the median income that they will be absolutely barred from filing bankruptcy. This is a big fat lie.
Perhaps you went to some website and learned that you make more than the median income for your area. Now, you are freaking out because some guy you work with says you can’t file for bankruptcy if you make more money than the median income. The truth is that that guy you work with is a big fat liar!
Once it is determined that your average income for the six month period prior to the filing of you case is over median, we will have to look at any deductions you may be able to claim.
For example, daycare expenses can be deducted from the means test. As a father of four, I can tell you that daycare can be cost prohibitive for some people. In many family situations, its cheaper for one spouse to stay home and take care of the children than it would be to pay for daycare expenses and for both spouses to work full time jobs. The great news for those who pay daycare expenses is that you get to deduct them on the means test. I’ve seen many cases where this one expense alone enabled an over median debtor to qualify for Chapter 7 bankruptcy.
If you pay for your own health insurance, you can deduct this expense as well. For a family of four people, its not uncommon to see people pay more than $1,000 per month for health insurance.
A third type of deduction that can be claimed is child support. Every dime you pay in child support can be deducted.
If you really want to explore your bankruptcy options, you need to meet with a bankruptcy attorney and forget about all that stuff you have heard at work. Bankruptcy just might work for you anyway even if you are over median.