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Bankruptcy Means Test Forms
In an attempt to clarify the mystification of the Means Test for our fellow paralegals, this blog will start at the basics. We are just going to be discussing what the Means Test is and clarifying each form and its purpose.
What Is the Means Test?
Bankruptcy filers must complete a Means Test. The Means Test is used to determine whether or not the debtor can pay back some of their debt or not, among other things such as the duration of a repayment plan and amount of such plan.
I often say “it is a complicated calculation that figures in most types of income, including child support.”
It really isn’t complicated, but you must take time to continuously study it to understand how to use it to assist your client in the best way possible. Experienced paralegals can help their attorneys and subsequently their clients a great deal if they understood the Means Test well.
Below the Poverty Guidelines? Easy.
When I began drafting bankruptcies, I did not understand the Means Test at all. I am lucky that the first cases I worked on were at Legal Aid of Nebraska.
At Legal Aid we only helped low-income individuals deemed high priority, therefore I never had to worry about anything more than entering their income correctly when it came to the Means Test. Which is the first and most important step to filling out the Means Test.
Well I Wish Someone Would Have Told Me
However, knowing what I know now, it would have been nice for someone to teach me everything there is to know about the Means Test, starting with the fact that there are actually six different types of Means Test forms that a bankruptcy paralegal would come across when assisting on bankruptcy cases.
Particularly because most of the bankruptcy preparation software options spit out the form for you, so you might not be aware of the differences until it is too late.
So to get started talking about the Means Test, take a look at each one of them listed below by form name, along with a brief description. You can click on the forms hyperlinked name to be taken to the official form on the US Bankruptcy Court’s website.
Form B 122A-1 | Chapter 7 Statement of Your Current Monthly Income
This is the form that most of your clients will complete and file. If the client makes less than the median income for their household size in their county, they will “pass” the test here and not need to fill out anything else.
Form B 122A-1Supp | Statement of Exemption from Presumption of Abuse Under §707(b)(2)
Debtors who are exempt, or not legally obligated to complete the means test, must still complete this form.
Form B 122A-2 | Chapter 7 Means Test Calculation
This is the other form that a lot of your clients will complete and file. If the client makes more than the median income for their household size in their county, they will have to enter in the deductions they are eligible for here in order to “pass.”
Form B 122B | Chapter 11 Statement of Your Current Monthly Income
This is for business bankruptcies. Chapter 11 is the chapter for businesses.
Form B 122C-1 | Chapter 13 Statement of Your Current Monthly Income and Calculation of Commitment Period
Debtors use this form when they are filing Chapter 13 bankruptcies, or repayment plan bankruptcies often called “Wage Earners Bankruptcy.”
This also determines the duration of the plan. It could range from 36 – 60 months.
Form B 122C-2 | Chapter 13 Calculation of Your Disposable Income
This determines the minimum monthly payment that the debtor has to submit to the bankruptcy trustee. It contributes to their plan payment. Sometimes, the amount figured is the amount that their plan payment is. This is the minimum amount that the debtor’s unsecured, general non-priority creditors must get in order for a Chapter 13 plan to be approved.
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About the Author
Valentina Zapata Harris
Mother | Advocate | Blogger