If you are filing bankruptcy and your income is higher than your state’s median income for a household of your size, you must complete the complete bankruptcy means test form. The means test determines if you are eligible to file Chapter 7 bankruptcy.

Many expenses have predetermined deduction amounts determined by IRS standards (local and national). But some other actual costs may still be deducted to help petitioners pass the means test and qualify for Chapter 7 bankruptcy.

When a petitioner’s income is less than the state’s median income for their household size, they automatically pass the means test without additional calculations based on income and expenses. If a petitioner’s income falls above the state’s median income for their household size, the full means test is necessary to determine eligibility. The following are some of the most critical expenses to include when completing your means test:

Tax Debt/Obligations: The means test allows petitioners to deduct actual tax obligations from their income; which can help debtors with a hefty annual tax liability quality to file Chapter 7 bankruptcy.

Insurance: You can deduct any medical, disability, or term life insurance coverage costs on the Chapter 7 means test.

Secured Debt Payments: If a petitioner’s average monthly mortgage or car loan is higher than the IRS standard housing or car ownership allowance, they can deduct the higher amount on the means test. The means test calculates the “average monthly payment” based on the amount of contractually required payments due in the next 60 months, so for the means test, your average payment may be less than your actual payment depending on when the loan will be paid in full.

Involuntary Employment Expenses: Deductions from the petitioner’s paycheck for costs required by their employer (i.e., union dues, uniform fees, mandatory retirement contributions, etc.) may be deducted on the Chapter 7 means test.

Court Ordered Payments: If the petitioner is making any court-ordered payments, such as spousal support or child support, these amounts can also be deducted on the means test.

Childcare Costs: If the petitioner has regular expenses related to childcare, such as babysitting, daycare, or preschool, etc. they can use them as means test deductions to reduce their disposable income.

Educational Expenses for Employment or Disabled Children: Petitioners can deduct education expenses required for their job or necessary for their disabled child.

Regular Charitable Contributions: If a petitioner has a history of making regular charitable contributions or donations and expects to continue in the same vein, they can deduct the contributions as an expense on their Chapter 7 means test.

Out-of-Pocket Health Care Costs: If the petitioner has health care expenses that are not covered by insurance and exceed the IRS national standard allowance, they can deduct the actual costs on their means test.

Continuing Expenses for the Care of Chronically Ill, Disabled, or Elderly Family/Household Member: If the petitioner cares for a chronically ill, disabled, or elderly family member or household member, they can deduct these financial contributions on their means test.

Necessary Expenses for Health or Welfare: If the petitioner has any other additional expenses essential to maintain their own or their family’s health and welfare, they may deduct them on the means test. Petitioners making this deduction will need to explain any exceptional circumstances relating to why the additional expenses should be an allowable deduction.

No matter why you need to file bankruptcy, the law office of Kenneth C. Rannick P.C is ready to help you determine the best options in your situation. You don’t have to deal with the financial struggle alone. Bankruptcy can be an overwhelming process, but at the law offices of Kenneth C. Rannick P.C., you’ll work with Consumer Bankruptcy Specialists. We help relieve the stress, ensure all bankruptcy paperwork is appropriately filed, and work to expedite the bankruptcy process to get a fresh financial start.

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