Median Income and the Means Test: Gross Income vs. Net Income
In a consumer bankruptcy case, a person’s gross income is used to calculate whether the debtor is above or below the median income for means test purposes. People often confuse gross and net (or “take-home”) income, and that is understandable, because most people’s household budgets operate according to their take-home pay. However, when you are trying to determine whether your household income is above or below median income, it is determined according to your gross income – not your take-home pay. If you have self-employment income, in order to determine your income for means test purposes, you will need to have an up-to-date profit and loss statement. It is also very important for self-employed people to keep good records and documentation (think: bank statements, receipts, etc.). Elizabeth Rosar Chermack is a Minnesota Bankruptcy Attorney, and can represent you in your bankruptcy matter. Call (952) 491-0390 or send an email to liz@chermacklaw.com to schedule a consultation with Liz. 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. Elizabeth Rosar Chermack, Attorney at Law, is a debt relief agency helping people to file for bankruptcy relief under the bankruptcy code.
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