The real non mortgage expenses of home ownership are nothing like the means test allowances provided. Bankruptcy lawyers need to rise to the challenge of aligning the means test with today’s economic and legal realities. The success of bankruptcy cases may turn on it. What the means test allows The means test provision for non-rent/mortgage […]
Marital Adjustment: Everything But The Kitchen Sink
Not every expenditure that benefits the debtor’s household or his family is a household expense. And, if it’s not a household expense, it doesn’t get added to CMI in a single spouse bankruptcy filing. That’s how the marital adjustment should work. But it’s not so simple. Household expense is not an expansive definition During a NACBA […]
When The Means Test Is Meaningless
A local bankruptcy attorney stumbled over the most basic part of the means test. Just this week… nearly 15 years after the bankruptcy “reform” act of 2005. I thought we were several years past bankruptcy attorneys clueless about the means test. But apparently not. When the means test doesn’t apply This fine fellow told a […]
The Means Test: The Clunker Allowance
As if the means test wasn’t illogical and opaque enough, consider the unwritten provision for old cars. Where do you find the unwritten allowance? It’s not in the Bankruptcy Code but in the Internal Revenue Manual at 5.8.20.3. The IRS allows a delinquent taxpayer with a paid for car more than 6 years old or […]
When It Doesn’t Add Up
It wasn’t a week after my friend Fredrick’s presentation on due diligence for bankruptcy lawyers that the need for one of his tricks emerged. There seems to be an ethereal convergence about such things. The client hadn’t revealed to the young lawyer bonuses that he had received in the means test look back period. The […]
Household Size Vanishes From Means Test Form
Drafters of the official bankruptcy forms have excised “household size” from the B-22 where we calculate the part A IRS standard allowances. In its place is “applicable number of persons”, which the form indicates is the number of exemptions the debtor would currently be allowed on their tax return plus the number of other persons […]
Means Test: Getting Business Income Correct
I expect clients to conflate themselves and their wholly owned business corporation; I didn’t expect the new bankruptcy lawyer to treat the corporation as if it didn’t exist. Yet as I reviewed a B-22 for a rookie bankruptcy lawyer, I found all of the corporation’s gross income included in the means test for the individual […]
