Before consumer debtors file for bankruptcy, federal law requires them to take a means test. The bankruptcy attorneys at Espy, Metcalf & Espy PC at Law in Dothan, AL, know incorrect answers can bar debt-burdened consumers from filing for Chapter 7 bankruptcy or prolong their payments under Chapter 13 bankruptcy. Their dedicated bankruptcy attorneys will explain errors people often make on the means test and how to prevent them.
Chapter 7 Bankruptcy: Common Means Test Mistakes
Applying an Incorrect Household Size
Household size establishes the median income comparison and amounts of standard deductions for certain expenses, including housing. Some courts determine household size by the number of people in a family unit who depend on one another. Other courts consider the household as everyone who lives under one roof, regardless of relationship. For test purposes, a smart approach is to count home residents with financial dependency on others in their family unit.
Inaccurate Mortgage Payment Adjustments
Individuals planning to turn their homes over to mortgage holders in a Chapter 7 or Chapter 13 bankruptcy filing must take the standard housing deduction. It is a means test error when a debtor claims mortgage payment amounts when they will be eliminating those payments.
Taking Impermissible Deductions
Determining allowable deductions can be a complicated process, but it must be done correctly. A child’s college expenses and voluntary contributions to retirement accounts and 401(k) plans typically are not allowable deductions. However, employment-dependent education costs and court-ordered payments, such as spousal or child support, are among the allowed deductions. A bankruptcy attorney can help you fill out the required forms, go over all possible deductions, and determine the ones for which you are eligible.
The asset protection and bankruptcy attorneys at Espy, Metcalf & Espy, PC At Law in Dothan, AL, will help you navigate the means test to overcome obstacles to Chapter 7 bankruptcy. Backed by more than 75 years of practice experience, these devoted advocates offer skilled representation while being sensitive to your needs. Call (334) 793-6288 to schedule a consultation. Visit their website to learn about their skilled attorneys and follow them on Twitter to receive news about the firm.