Before you determine whether you have passed the means test, you need to consult with a qualified bankruptcy attorney. Bankruptcy law is an extremely complicated area of the law. The calculations and the means test itself are extremely difficult. Bankruptcy can do wonderful things for people, but it is like running through a minefield. You have to know where the mines are so you can avoid stepping on them. You do not want your bankruptcy to get out of hand, and cause your situation to get worse. Consulting with a qualified and experienced bankruptcy attorney from the beginning of contemplating filing bankruptcy is the best route.
An attorney can best steer you with the means test, or if you make some other adjustments, you can pass the means test, even though at first it looked like you will not. For an example, many times teachers are paid nine months out of the year. The lookback period is six months, a teacher that has received increased pay from say, December through June, is getting most of their pay, but all summer long, they are not receiving any money. They may be better off waiting until September in filing a bankruptcy, because that is going to change the calculations on the means test. It does not sound fair, but I did not write the laws, Congress did.
Sometimes people get large bonuses or they have had income from an inheritance, or a lottery win, or they cashed in a 401(k). You get a big lump sum payment, and that is going to skew your disposable income calculations on your means test. Therefore, you would want to wait until that drops off from the six months lookback period, and then get a more accurate reading on what your disposable income would be, once you figure out what you have done on a means test. What should you file? What you should get to keep? If you file a Chapter 7, what property would you lose? What might you do to protect that property that you would otherwise lose, or even if you should file a Chapter 7 in the first place, or go for a Chapter 13. Those are all things that you need a qualified attorney to review.
Certain debts are discharged in a Chapter 13 that are not discharged in a Chapter 7. So sometimes, it is better to do a Chapter 13.
People can file a Chapter 13 regardless of what happens on a means test. Sometimes I have clients, who come in, and they are going to pass the means test, and qualify for a Chapter 7, but their best bet is to file a Chapter 13. Chapter 13 can do things that a Chapter 7 cannot. For example, if somebody is behind on their mortgage payments, and is about to be foreclosed, Chapter 7 is going to delay the foreclosure for a couple of months, but it is not going to prevent it. A Chapter 13 can stop the foreclosure, and let the debtor catch up to the arrearage on the house over a three to five year period of time, and save the house from foreclosure.
If they have a second mortgage that there is no value to support, because the first mortgage eats up all the value of the house, a Chapter 13 can treat that as an unsecured debt, and strip the second mortgage off the real estate. You cannot do that in a Chapter 7. If you owe an ex-spouse for property settlement, a Chapter 13 can discharge that, whereas a Chapter 7 cannot. So you really have to take a look at all of the circumstances to chart the best course for somebody. I do not know how anybody can do that without an attorney who actually understands bankruptcy laws.
The means test is based on household size, but Congress did not define household. So who is a member of a household? Some judges interpret it as what heads are on the beds. Who is living under the same roof? Other judges say, who is dependent on the income? They look at an economic unit. What do you do with the kids that are in college, or kids who spend one week with Mom, and the next week with Dad? If Dad is filing, will they be in his household if we are using heads on the beds? At least this week, do we wait and file next week when the heads are on his beds? There is a lot to consider.
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