Can I change my finances to become eligible for chapter 7? 24 Answers as of July 11, 2013

I took the "Means Test" and realized that I currently do not pass the means test but would much prefer to file a Chapter 7. Is it fraudulent to change my income and expenses a bit in the next few weeks and then filing for chapter 7?

Ask a Local Attorney. 100% Anonymous. Free Answers.

Free Case Evaluation by a Local Lawyer: Click here
Breckenridge and Walton
Breckenridge and Walton | Alan D. Walton
The means test is based on your historical income and expenses going forward. It does not make a lot of sense. You should talk to a bankruptcy attorney about what can be done in your jurisdiction to qualify for a chapter 7.
Answer Applies to: Michigan
Replied: 7/5/2011
Law Office of J. Scott Logan, LLC
Law Office of J. Scott Logan, LLC | John Scott Logan
Eligibility depends upon your income and expenses in the most recent completed 6 months. Intentionally lowering your income raises questions of bad faith, which can result in a denial of discharge.
Answer Applies to: Maine
Replied: 7/1/2011
Law Office of Asaph Abrams
Law Office of Asaph Abrams | Asaph Abrams
The income factored into the means test is the 6 months prior to the month of filing. However, projected income and anticipated increases also factor into eligibility. It is bad faith to reject or minimize one's income in order to qualify for bankruptcy. The means test is not a straightforward document, and there is often confusion between median-income determination and the means test itself. Being above median does not mean you would not qualify for chapter 7; it means you have to complete the means test.
Answer Applies to: California
Replied: 7/1/2011
Law Offices of Sheryl S. Graf
Law Offices of Sheryl S. Graf | Sheryl S. Graf
The Means Test is a complicated computer program that looks at a variety of factors, primarily focusing on your income for the past 6 months, and standards established by the government for various living expenses (i.e. food, clothing, utilities, health care, housing, vehicle operation, etc.). Until an experienced attorney inputs all of your personal data during preparation of your Chapter 7 Bankruptcy case, it is impossible to make a final determination of whether you will pass the Means Test Calculation. Also, as a rule of thumb, if you have enough net disposable income to be able to afford to pay 25% of your total debt over a 3-year period, you qualify for a Chapter 13 repayment plan, and not a Chapter 7 complete discharge. Debts resulting from willful and malicious acts, embezzlement, or fraud are not dischargeable in bankruptcy proceedings if the creditor files a complaint in the case. Additionally, if you have more than $100,000 total consumer debt, or have charged more than $5,000 total over the past year on any single credit card, the trustee may claim that there has been an "abuse" of the bankruptcy system and object to the discharge.
Answer Applies to: California
Replied: 6/30/2011
Financial Relief Law Center
Financial Relief Law Center | Mark Alonso
Changes that are not true would be considered fraud.
Answer Applies to: California
Replied: 6/30/2011
    Ursula G. Barrios Law
    Ursula G. Barrios Law | Guillermo Machado
    Fraud if you misrepresent your numbers to pass a means test. On the other hand, no can force you to work if you don't want to.
    Answer Applies to: California
    Replied: 6/30/2011
    Law Office of Harry L Styron
    Law Office of Harry L Styron | Harry L Styron
    First, the means test is based on your actual income over the previous six months. Second, it is a federal crime, punishable by prison, to knowingly make false statements on a bankruptcy petition or in the proceeding. Third, the bankruptcy trustee will want to see your income tax returns and bank statements.
    Answer Applies to: California
    Replied: 6/30/2011
    Law Office of Maureen O' Malley
    Law Office of Maureen O' Malley | Maureen O'Malley
    Depends on what you mean. Do you have a 2d job that you've been doing to meet expenses? You could quit that if you haven't held it for long. If there are expenses you've avoided because you couldn't afford, but need, you could potentially add those. But the bare numbers don't tell the story. You should meet with a qualified bankruptcy attorney who can guide you in your specific circumstances. Filing on your own, especially under these facts, can cost you a lot, both financially and in obtaining a discharge.
    Answer Applies to: Virginia
    Replied: 6/30/2011
    Janet A. Lawson Bankruptcy Attorney
    Janet A. Lawson Bankruptcy Attorney | Janet Lawson
    The means test is a 6 month look back. It is fraud if you make a change that is not intended to be permanent. Chapter 7 cases are subject to being audited so be careful here. Consult with a lawyer about your specific facts to see if you have calculated the means test correctly. There is plenty of room there for error. It looks deceptively simple.
    Answer Applies to: California
    Replied: 6/30/2011
    The Schreiber Law Firm
    The Schreiber Law Firm | Jeffrey D. Schreiber
    First, it is based on a six month average, so it may take longer than a few weeks to get the average down. Second, your future income can be taken into account for abuse, so a temporary reduction may not be available as a option.
    Answer Applies to: California
    Replied: 6/30/2011
    Law Office of Lynnmarie A. Johnson
    Law Office of Lynnmarie A. Johnson | Lynnmarie Johnson
    The means test looks back at the last 6 months of income, so changing your income and expenses for a few weeks is unlikely to effect it sufficiently to allow you to qualify for a Ch 7.
    Answer Applies to: Michigan
    Replied: 6/30/2011
    Bankruptcy Law Office of Robert Weed
    Bankruptcy Law Office of Robert Weed | Robert Weed
    Rather than play games with your income, if you consulted a good bankruptcy lawyer, you might find ways you qualify by being more accurate on the expenditure side of your budget.
    Answer Applies to: Virginia
    Replied: 6/30/2011
    Southern California Law Advocates
    Southern California Law Advocates | Norma Duenas
    If you intentionally alter your expenses or income simply to qualify for Chapter 7 bankruptcy then this would be fraudulent. If on the other hand you had increased expenses that resulted from necessity such as needing to purchase health insurance, or increased medical expenses from a condition, or a new dependent that you had to provide for, then this would not be fraudulent. Similarly if you intentionally decrease you income, to qualify then this would be viewed negatively. On the other hand if you had a decrease as a result of having less overtime available, or cut hours, then this would not be viewed negatively.
    Answer Applies to: California
    Replied: 6/30/2011
    Bankruptcy Law office of Bill Rubendall
    Bankruptcy Law office of Bill Rubendall | William M. Rubendall
    The means test is calculated based on income for the prior six months. If income is decreasing eligibility might occur by waiting until the six month income is low enough to pass the means test.
    Answer Applies to: California
    Replied: 6/30/2011
    Judith A. Runyon, Esq. Attorney at Law
    Judith A. Runyon, Esq. Attorney at Law | Judith A. Runyon
    Well, what do you think? Fraud is fraud.
    Answer Applies to: California
    Replied: 6/30/2011
    The Law Office of Mark J. Markus
    The Law Office of Mark J. Markus | Mark Markus
    The means test looks at income from all sources received in the 6 calendar months prior to filing and uses primarily IRS allowed standards for expenses. I'm not sure what expenses you could change that would affect the means test, unless you got health insurance or something like that. As far as income goes, you can of course change it if you do it legitimately. It's hard to say from your comment what you are specifically contemplating. The means test isn't the only "test" you have to "pass" in order to qualify for Chapter 7. There is also the current income/expense test which looks at your present income and expenses, as well as any anticipated changes likely to occur in the following 12 months, so if your income is only temporarily being reduced (for means test or other reasons), it may not help. This is where an experienced bankruptcy attorney is necessary to advise you and devise an appropriate and lawful strategy for you.
    Answer Applies to: California
    Replied: 6/30/2011
    Mercado & Hartung, PLLC
    Mercado & Hartung, PLLC | Christopher J. Mercado
    The look back period is 6 months. Documentation will be required during that period (paystubs, bank account statements, etc.) The trustee will likely catch it.
    Answer Applies to: Washington
    Replied: 6/30/2011
    Indianapolis Bankruptcy Law Office of Eric C. Lewis
    Indianapolis Bankruptcy Law Office of Eric C. Lewis | Eric Lewis
    What you are saying sounds fraudulent. You can't artificially manipulate your income or expenditures. Those items "are what they are" and you must be truthful and act in good faith in filing for bankruptcy relief.
    Answer Applies to: Indiana
    Replied: 6/30/2011
    Carballo Law Offices
    Carballo Law Offices | Tony E. Carballo
    You can wait to file until your income goes down because of circumstances out of your control. For example, people who are paid wages biweekly get paid 3 times in two months each year or maybe you don't get paid for vacations. So filing in the month you get paid three times or filing after taking an unpaid vacation might make a difference. There is some pre-filing planning that is acceptable but, but for example, quiting a job just to qualify for Chapter 7 may be considered in bad faith in some areas. You need to have a local bankruptcy lawyer represent you and the lawyer can tell you the limits of what is considered acceptable in the area where you are going to file. These are the kinds of things where an experienced local lawyer can be of tremendous help in avoiding serious problems.
    Answer Applies to: California
    Replied: 6/30/2011
    Law Office of L. Paul Zahn
    Law Office of L. Paul Zahn | Paul Zahn
    What you do in the next few weeks will have very limited impact upon your eligibility, as whether or not you qualify is based upon your income for the six months prior to filing. I can review your income and expenses to determine if it is possible to qualify you at this time.
    Answer Applies to: California
    Replied: 7/11/2013
    Law Offices of John J. Ferry, Jr.
    Law Offices of John J. Ferry, Jr. | John J. Ferry, Jr.
    It may be fraudulent, or it may be appropriate pre-filing planning. Obviously, the figures you put on the means test must be accurate. If, for example, you intentionally quit work in order to get eligible for a chapter 7, that probably would be fraudulent. If it is a close case, and a legitimate change in your expenses will work to make you eligible, that probably would not be fraudulent. (Although you definitely must not incur new debt in anticipation of bankruptcy.) Talk to your attorney about this.
    Answer Applies to: Pennsylvania
    Replied: 6/30/2011
    Ashman Law Office
    Ashman Law Office | Glen Edward Ashman
    Your post first of all makes it sound like you are not using counsel. Secondly, it sounds like you are headed for federal prison. Instead of cooking the books, screwing up your life and maybe ending up in jail, see a lawyer. There are many legitimate adjustments an experienced lawyer can make that may help you "pass" the same test without breaking the law. I repeat: see a lawyer.
    Answer Applies to: Georgia
    Replied: 6/30/2011
Click to View More Answers:
12 3 4 Free Legal QuestionsConnect with a local attorney