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What You Can Conduct Under The Means Test

At the offices of Lee Norton Bain, Attorney at Law, in Georgetown, I represent clients in all types of consumer bankruptcy matters, including helping people calculate whether they are eligible to file for Chapter 7 or Chapter 13 bankruptcy using the means test.

A Sampling Of Allowable Deductions

Under the means test, there are many different deductions people can use to readjust their income to see if they qualify. These deductions are very detailed and are broken down by county, metropolitan areas, census regions, family size, income, number of vehicles and various other metrics. Among the allowed deductions are the following:

  • Living expenses according to the collection standards of the IRS for debtor’s household size
  • Housing and utility expenses that qualify for a debtor’s household size for the state and county in which debtor resides
  • Ownership costs related to the debtor’s vehicles (not to exceed two vehicles)
  • Operating costs (gas, tires, oil, maintenance, registration) related to the operation of debtor’s vehicles and/or public transportation
  • Involuntary deductions required for employment, such as: mandatory retirement plans, union dues and uniform, and term life insurance premiums for the debtor(s) only — no other type of life insurance or persons allowed
  • Court-ordered payments such as alimony, child support or other domestic support obligations — amount actually expended for child care such as babysitting, day care, nursery and preschool (does not include expenses for education)
  • A certain amount per person in each household for health care
  • Average monthly amount actually expended for health and welfare of debtors or dependents that is not reimbursed by insurance or paid by a health savings account and is in excess of the allowance — provided there is adequate documentation to support the expense(s)
  • Costs related to pagers, call waiting, caller ID and internet that are necessary for the health and welfare of the debtor or debtor’s dependents, health and disability insurance premiums and contributions to health savings account
  • Expenses incurred for the care and support of elderly, chronically ill or disabled household or a member of your immediate family who is unable to pay for such expenses
  • Expenses incurred for protection against family violence home energy costs in excess of allowances, provided there is proper documentation and the excess amount does not exceed 5 percent of the allowed amount
  • Education expenses for dependent children under the age of 18 that the debtor(s) actually incurs not to exceed a certain amount per eligible child — must be able to provide documentation as to the reasonableness and necessity of the expense and that it is not included elsewhere
  • Actual expenses for administering a Chapter 13 plan

The following are some other deductions that are allowed:

  • Deductions for federal, state and local taxes, excluding real estate and sales taxes
  • 1/60th of secured debt that will become due in the five years after the filing of the bankruptcy case (each secured debt must be examined to determine whether it is for the purchase of a luxury item as such purchases may be disallowed by the bankruptcy court)
  • 1/60th of amount necessary to “cure” defaults on secured debt such as home mortgage defaults and defaulted automobile or other secured loans
  • 1/60th of all pre-petition priority debt such as priority tax obligations, child support or alimony claims for which you were liable at the time of the bankruptcy filing
  • Continued contributions to any tax-exempt charities in accordance with past giving not to exceed 15 percent of the debtor’s Schedule I gross income on Form 22 current monthly income

Here To Assist You

I understand that this is a confusing process, but I am a Texas bankruptcy lawyer who is here to help you navigate it and use these expenses correctly. If you have questions, contact my office to discuss your bankruptcy questions. I offer a free 30-minute consultation without any obligation. You can reach me by phone at 512-686-4293 or 800-806-0754. You may also reach me via email.