Chermack Law

Category Archives: Bankruptcy Law

Updated means test numbers – effective November 1, 2020

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The means test numbers have been updated with an effective date of November 1, 2020.

Below is a chart that shows the median incomes for means test purposes for bankruptcy cases filed in Minnesota effective November 1, 2020:

Note:    Your income for means test purposes is determined by all income received in the 6 full months prior to filing your case. We figure out the amount of gross income that you received during those 6 months and then multiply it by 2; if the total is under the “Gross Annual Income” listed in the chart above for your household size, then there will likely not be a means test issue.

If your case is filed any time between November 1 and November 30, for example, then all gross income received from May 1 through October 31 (relevant months: May, June, July, August, September, October) will be used to calculate your gross income for means test purposes.

Elizabeth Rosar Chermack is a Minnesota Bankruptcy Attorney with an office in Burnsville, and she can help you analyze whether bankruptcy is the right choice for you.   Call (952) 491-0390 or send an email to liz@chermacklaw.com to schedule a consultation.

ATTORNEY ADVERTISING MATERIAL. The content of this website is for informational purposes only and is not intended as legal advice. No attorney/client relationship is formed by use of this website. Do not submit confidential information via this site unless and until there is a signed retainer contract on file.

Updated means test numbers – effective November 1, 2019

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The means test numbers have recently been updated and took effect on November 1, 2019.

The median incomes for Minnesota have decreased slightly for households of 1 and 2.  The median incomes for Minnesota have increased slightly for households of 3 and more.  Depending on the size of your household, the new means test numbers may make it either slightly easier or slightly more difficult to quality for Chapter 7 bankruptcy. 

Below is a chart that shows the median incomes for means test purposes for bankruptcy cases filed in Minnesota effective November 1, 2019:

*Add $9,000 for each individual in excess of 4.

Note:    Your income for means test purposes is determined by all income received in the 6 full months prior to filing your case. We figure out the amount of gross income that you received during those 6 months and then multiply it by 2; if the total is under the “Gross Annual Income” listed in the chart above for your household size, then there will likely not be a means test issue.

If your case is filed any time between November 1 and November 30, for example, then all gross income received from May 1 through October 31 (relevant months: May, June, July, August, September, October) will be used to calculate your gross income for means test purposes.

Elizabeth Rosar Chermack is a Burnsville Bankruptcy Attorney, and can help you analyze whether bankruptcy is the right choice for you.   Call (952) 491-0390 or send an email to liz@chermacklaw.com to schedule a consultation.

ATTORNEY ADVERTISING MATERIAL. The content of this website is for informational purposes only and is not intended as legal advice. No attorney/client relationship is formed by use of this website. Do not submit confidential information via this site unless and until there is a signed retainer contract on file.

Updated means test numbers – effective April 1, 2019

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The means test numbers have been updated with an effective date of April 1, 2019.

Below is a chart that shows the median incomes for means test purposes for bankruptcy cases filed in Minnesota effective April 1, 2019:

Note:    Your income for means test purposes is determined by all income received in the 6 full months prior to filing your case. We figure out the amount of gross income that you received during those 6 months and then multiply it by 2; if the total is under the “Gross Annual Income” listed in the chart above for your household size, then there will likely not be a means test issue.

Elizabeth Rosar Chermack is a Minnesota Bankruptcy Attorney, and can help you analyze whether bankruptcy is the right choice for you.   Call (952) 491-0390 or send an email to liz@chermacklaw.com to schedule a consultation.

Updated means test numbers – effective November 1, 2018

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The means test numbers have been updated with an effective date of November 1, 2018.

The median incomes for Minnesota have increased.  As a result, it may now be easier for some people to qualify for Chapter 7 bankruptcy.  Below is a chart that shows the median incomes for means test purposes for bankruptcy cases filed in Minnesota effective November 1, 2018:

Note:    Your income for means test purposes is determined by all income received in the 6 full months prior to filing your case. We figure out the amount of gross income that you received during those 6 months and then multiply it by 2; if the total is under the “Gross Annual Income” listed in the chart above for your household size, then there will likely not be a means test issue.

If your case is filed any time between November 1 and November 30, for example, then all gross income received from May 1 through October 31 (relevant months: May, June, July, August, September, October) will be used to calculate your gross income for means test purposes.

 

Elizabeth Rosar Chermack is a Minnesota Bankruptcy Attorney, and can help you analyze whether bankruptcy is the right choice for you.   Call (952) 491-0390 or send an email to liz@chermacklaw.com to schedule a consultation.

 

ATTORNEY ADVERTISING MATERIAL. The content of this website is for informational purposes only and is not intended as legal advice. No attorney/client relationship is formed by use of this website. Do not submit confidential information via this site unless and until there is a signed retainer contract on file.

Exemption from the means test for non-consumer debts

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All debtors are not required to pass the means test.

11 U.S. Code Section 707(b) allows for Chapter 7 bankruptcy cases to be dismissed or converted to Chapter 11 or Chapter 13 bankruptcy if the Chapter 7 case if the Debtor’s debts are “primarily consumer debts” and if granting relief would be an “abuse” of the bankruptcy code.

If the debts are not primarily consumer debts, then typically the Debtor is not required to complete and pass the means test; even if their income is above the median income.

What is a consumer debt for bankruptcy purposes? 11 U.S. Code Section 101(8) provides that consumer debt is debt incurred by an individual for a personal, family, or household purpose. A non-consumer debt, for this exemption from the means test, typically is a business-related debt. If a debtor owned their own business and incurred a debt for that business, then that debt may be a non-consumer debt for purposes of this means test exemption.

In order to figure out if this exemption from the means test applies in your case, the Debtor will need to be able to categorize each of their debts as a “consumer” or “non-consumer” debt. It is also important to be able to document why a specific debt is a non-consumer debt. From there, the Debtor and their attorney will determine whether their debts are “primarily” consumer debts or not.

It can take quite a bit of documentation to successfully prove that this exemption from the means test applies in your bankruptcy case. It is still less documentation, though, than you would likely have to provide if you were required to submit the long form means test.

 

Elizabeth Rosar Chermack is a bankruptcy lawyer with an office in Burnsville, and can help you analyze whether an exemption to the bankruptcy means test applies to you. Call (952) 491-0390 or send an email to liz@chermacklaw.com to schedule a consultation.

ATTORNEY ADVERTISING MATERIAL. The content of this website is for informational purposes only and is not intended as legal advice. No attorney/client relationship is formed by use of this website. Do not submit confidential information via this site unless and until there is a signed retainer contract on file.

Exemption from the means test for qualifying disabled veterans

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Not all debtors are required to pass the means test.  For example, 11 U.S. Code Section 707 provides that  a disabled veteran who incurred the debts primarily while on active duty or performing a homeland defense activity may be exempt from the means test.

In order to qualify for this exemption from the means test, the Debtor must document that they meet the statutory definition of a disabled veteran. Additionally, the Debtor will need to provide documentation of the dates during which their debts were incurred (and the amount of each debt). Then the Debtor will need to document whether they were on active duty or performing a homeland defense activity during the time that those debts were incurred.

It can take quite a bit of documentation to successfully prove that this exemption from the means test applies in your bankruptcy case. It is still less documentation, though, than you would likely have to provide if you were required to submit the long form means test.

Elizabeth Rosar Chermack is a Burnsville Bankruptcy Attorney, and can help you analyze whether an exemption to the bankruptcy means test applies to you. Call (952) 491-0390 or send an email to liz@chermacklaw.com to schedule a consultation.

ATTORNEY ADVERTISING MATERIAL. The content of this website is for informational purposes only and is not intended as legal advice. No attorney/client relationship is formed by use of this website. Do not submit confidential information via this site unless and until there is a signed retainer contract on file.

Updated means test numbers – effective April 1, 2018

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New means test numbers are going into effect on April 1, 2018. The median incomes for Minnesota have increased.  As a result, it may now be easier for some people to qualify for Chapter 7 bankruptcy. 

 

Below is a chart that shows the median incomes for means test purposes for bankruptcy cases filed in Minnesota effective April 1, 2018:

*Add $8,400 for each individual in excess of 4.

 

Note:    Your income for means test purposes is determined by all income received in the 6 full months prior to filing your case. We figure out the amount of gross income that you received during those 6 months and then multiply it by 2; if the total is under the “Gross Annual Income” listed in the chart above for your household size, then there will likely not be a means test issue.

 

If your case is filed any time between July 1 and July 31, for example, then all gross income received from January 1 through June 30 (relevant months: January, February, March, April, May, June) will be used to calculate your gross income for means test purposes.

 

Elizabeth Rosar Chermack is a Minnesota Bankruptcy Attorney, and can help you analyze whether bankruptcy is the right choice for you.   Call (952) 491-0390 or send an email to liz@chermacklaw.com to schedule a consultation.

 

ATTORNEY ADVERTISING MATERIAL. The content of this website is for informational purposes only and is not intended as legal advice. No attorney/client relationship is formed by use of this website. Do not submit confidential information via this site unless and until there is a signed retainer contract on file.

Bankruptcy and the Means Test

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In my previous posts I discussed some of the distinctions between Chapter 7 and Chapter 13 bankruptcy. The means test is an important element to both Chapter 7 and Chapter 13 bankruptcy (unless you are exempt from the means test). If you do not pass the means test, you will not qualify for a Chapter 7 bankruptcy. The means test determines the length of time of your Chapter 13 plan in a Chapter 13 bankruptcy.

When new means test numbers are released, I tend to post about them on my blog. The means test numbers can be confusing. If your income is above the median income for your household size, it does not necessarily mean that you won’t qualify for a Chapter 7 bankruptcy. It also does not necessarily mean that you will be in a 5-year (instead of a 3-year) Chapter 13 plan.

If your income is above the median income for your household size, then in order to determine:

  • the length of your payment plan in a Chapter 13; or
  • whether you qualify for a Chapter 7 bankruptcy

you will need to submit the “long form” means test. The long form means test is based on IRS standards. Additionally, certain expenses in the means test are based on your actual expenses.

The means test can be very complicated. The forms themselves are not overly complicated, but the laws and standards behind the forms are. If you are submitting the long form means test, your attorney will likely require a large amount of documentation from you. Your attorney is not requiring that paperwork because they think it’s fun or because they are nosey; they are hoping to help you have the best possible chance at passing the means test.

Elizabeth Rosar Chermack is a Minnesota Bankruptcy Attorney, and can help you analyze whether Chapter 7 or Chapter 13 bankruptcy is the right choice for you.   Call (952) 491-0390 or send an email to liz@chermacklaw.com to schedule a consultation.

ATTORNEY ADVERTISING MATERIAL. The content of this website is for informational purposes only and is not intended as legal advice. No attorney/client relationship is formed by use of this website. Do not submit confidential information via this site unless and until there is a signed retainer contract on file.