Does Chapter 7 Bankruptcy go by gross income or net income? 31 Answers as of January 24, 2014

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Law Office of Susan G. Taylor
Law Office of Susan G. Taylor | Susan G. Taylor
Most lawyers offer a free consultation you ought to get one. The Means Test number is gross. If over that amount, you must take the Means Test. But on it you will get credit for most paystub/business expense deductions, including taxes and insurance.
Answer Applies to: Texas
Replied: 1/24/2014
Stephens Gourley & Bywater | David A. Stephens
The means test is based on gross income.
Answer Applies to: Nevada
Replied: 1/23/2014
J. Baron Groshon, P.A. | J. Baron Groshon
A person's ability to pass the "means test" and qualify to file a Chapter 7 case is based on both their gross income and their net income. If you have questions regarding whether you pass or fail the means test, then it would be advisable to meet with a bankruptcy attorney so that they could properly analyze your options. Most bankruptcy attorneys offer free consultations.
Answer Applies to: North Carolina
Replied: 1/22/2014
Stuart P Gelberg
Stuart P Gelberg | Stuart P Gelberg
Your Q is unintelligible. Are you referring to the Means Test? Gross income.
Answer Applies to: New York
Replied: 1/20/2014
Meister & McCracken Law Firm, PLLC | Joanne M. McCracken
The first consideration for the means test is annual income based on the last six months gross income. However, there are other factors that are considered in determining whether you are eligible for a Chapter 7 or Chapter 13a qualified bankruptcy attorney can help you with this.
Answer Applies to: Arkansas
Replied: 1/17/2014
    LAW OFFICE OF DAVID A. KUBAT
    LAW OFFICE OF DAVID A. KUBAT | DAVID A. KUBAT
    The Means Test used to determine (at least partly) your eligibility for a Chapter 7 bankruptcy compares your total average gross income for the 6 months prior to filing a bankruptcy with the median gross income for Washington State (depending on the number of people in your household).
    Answer Applies to: Washington
    Replied: 1/17/2014
    Garner Law Office
    Garner Law Office | Daniel Garner
    The "means test" looks at gross income for the past 6 months; at this time, that would be the period from July to December 2013. If you have business income, that is allowed to be stated in net terms, after reasonable and necessary business expenses are subtracted. All other income into your household, whether taxable or not, must be included (such as SNAP food stamps and WIC) other than social security benefits. If the annualized amount of that income for that period exceeds the median for your size household in your geographic area, then you have to do the "long form" means test which makes allowances for typical household expenses and calculates a disposable monthly income based on household surveys. If that result falls below a certain number, then you can qualify for a Chapter 7 even if your gross income exceeds the median. On the Oregon Bankruptcy Court's website, there are links to all the information you need.
    Answer Applies to: Oregon
    Replied: 1/17/2014
    Marc S. Stern
    Marc S. Stern | Marc S. Stern
    It doesn't "go by" either. If your adjusted gross income is above the median, there are a series of deductions to determine whether your filing is presumed abusive. These calculations have nothing to do with reality and trying to understand them is a waste of time. They are what Congress mandated.
    Answer Applies to: Washington
    Replied: 1/17/2014
    Law Office of Jeffrey Solomon
    Law Office of Jeffrey Solomon | Jeffrey Solomon
    The question of whether bankruptcy looks at gross or net income is that it looks at both. The starting point is gross income. Gross income for the 6 months prior to filing bankruptcy is the starting point for preparing the "means test". We then compare that average to the median income of the state. The bankruptcy schedules require showing a budget, which would show gross income and payroll deductions.
    Answer Applies to: Florida
    Replied: 1/17/2014
    LAW OFFICES OF CRAIG BURNETT | Craig Alan Burnett
    I assume you are referring to eligibility under the Means Test. It starts with your gross income and compares it to the median income for your household size and the state you live in. If your average monthly gross income for the previous six months is below median, you are eligible to file Chapter 7. If your income is above median, then you may still be eligible, but you must satisfy the Means Test to determine whether a "Presumption of Abuse" arises. If your expenses allowed under the Means Test exceed your income, then you are eligible. Even if these expenses are less than your income, you may still be eligible in some circumstances. It can be complicated. You should contact an experienced bankruptcy attorney if you are considering any type of bankruptcy relief.
    Answer Applies to: California
    Replied: 1/20/2014
    Janet A. Lawson Bankruptcy Attorney
    Janet A. Lawson Bankruptcy Attorney | Janet Lawson
    The B22 form has you put in the gross, then it has lines for deductions like taxes, insurance and other allowed items. If get to the end have "zero" that makes you a ch7. If you have a little bit left over you could still be ch7. I don't have the math on that as my computer makes that calculation for me.
    Answer Applies to: California
    Replied: 1/17/2014
    Patrick W. Currin, Attorney at Law | Patrick Currin
    There are formulas in the means test that operate on both. If your gross income is less than average for your county, you immediately qualify. If it is more than that, you use some of your own factors reducing income along with DOJ figures for certain expenses. This test and the difficulties of 50 pages of forms are why you should not handle a BK yourself and seek the advice of counsel.
    Answer Applies to: California
    Replied: 1/17/2014
    Danville Law Group | Scott Jordan
    Neither actually. To pass the Means Test, it goes by Disposable Income. Essentially Gross Income less allowable deductions.
    Answer Applies to: California
    Replied: 1/20/2014
    A Fresh Start
    A Fresh Start | Dorothy G Bunce
    Within what context? The Means Test is looking at gross income, the "good faith" test looks at the net. Even if your gross income is above the Median Amount, that does not mean you can't qualify to file a Chapter 7 bankruptcy, but it does mean more work for the attorney representing you to get you qualified. An experienced attorney can get nearly anyone who meets the good faith requirement qualified for Chapter 7 or can get the requirement waived.
    Answer Applies to: Nevada
    Replied: 1/20/2014
    Goldsmith & Guymon
    Goldsmith & Guymon | Marjorie Guymon
    It is based upon your 6 month gross income from all sources.
    Answer Applies to: Nevada
    Replied: 1/20/2014
    Deborah F Bowinski, Attorney & Counselor at Law | Debby Bowinski
    Total gross income from all sources for the household for the last six full calendar months immediately before the filing date. This is not simple stuff please consider retaining an experienced lawyer to assist you.
    Answer Applies to: Colorado
    Replied: 1/17/2014
    Steele, George, Schofield & Ramos, LLP
    Steele, George, Schofield & Ramos, LLP | Alan E. Ramos
    I assume that you are referring to Means Test income analysis. The figures used start with gross income from all sources (with exception for certain government payments such as Social Security). However, the analysis doesn't end there and includes allowances for payments on secured debt and certain other payments.
    Answer Applies to: California
    Replied: 1/20/2014
    Charles Schneider, P.C.
    Charles Schneider, P.C. | Charles J. Schneider
    Gross. The reference is in the forms.
    Answer Applies to: Michigan
    Replied: 1/20/2014
    Law Office of Michael Johnson
    Law Office of Michael Johnson | Michael Johnson
    Gross but there are deductions.
    Answer Applies to: Florida
    Replied: 1/20/2014
    The Law Office of Darren Aronow, PC
    The Law Office of Darren Aronow, PC | Darren Aronow
    You put your gross income and then there are areas where you minus out the taxes to arrive at the net.
    Answer Applies to: New York
    Replied: 1/17/2014
    Law Office of Shawn N. Wright | Shawn N. Wright
    You need to meet with an experienced bankruptcy attorney to save yourself a lot of trouble. I have filed nearly 2,000 bankruptcy cases, but I would not be able to tell in certain close cases whether a person qualifies (or not) for a Chapter 7 bankruptcy. There's the infamous Means Test, which takes into account the filer's total household size along with total GROSS household income. You then compare that to the median income for the household size in your State. For example, right now, for a family of four in Pennsylvania, the median income is $81,961. So, as a starting point, if your total household income for the past six months is below $81,961 (you have to annualize that number, so the average monthly income is $6,830), then you are likely eligible for Chapter 7. But caution, you're still not done. There's an examination on Schedules I and J that compares your actual income and household expenses to see if there's isn't some form of abuse of the system. Now if you're above the median income amount, you might still pass the Means Test. I had a couple (no kids) who came in last month and they passed the Means Test despite the fact that their income was well over the median amount. That surprised me. Their income for the past 6 months averaged out to be $66,000 for the year, whereas the median income is $55,872. The reason is that they had a bunch of legitimate medical and vehicle deductions that basically reduced the possibility that they could have filed a meaningful Chapter 13 case. Mind you, these numbers change every six months, so don't take what I am writing as gospel forever. So, the answer to your question is gross income, but that's merely as the starting point, and you have to do a lot of other calculations to get the real answer as to your eligibility.
    Answer Applies to: Pennsylvania
    Replied: 1/20/2014
    The Law Office of M Grater LLC
    The Law Office of M Grater LLC | Mark O. Grater
    The "means test" for qualification goes by gross income and if you are over you can recomputed it using a form of net income. The actual budget computes net income.
    Answer Applies to: Connecticut
    Replied: 1/17/2014
    Stittleburg Law Office
    Stittleburg Law Office | Bernd Stittleburg
    If you are looking at the Means Test, you have to use gross income.
    Answer Applies to: Georgia
    Replied: 1/17/2014
    The Salas Firm
    The Salas Firm | Ron Salas
    In reality neither. It starts with gross but provides some allowances. You need to speak to an attorney or do more homework.
    Answer Applies to: Colorado
    Replied: 1/17/2014
    Law Office of Mark B. French
    Law Office of Mark B. French | Mark B. French
    You are not providing any context, but I am guessing that your are referring to Form 22A, commonly known as the "means test". This form is one of the tests you have to pass to be eligible for relief under Chapter 7. The form provides a "safe harbor" if your income is below the median (middle) income for a family of your size in your area. That means you automatically pass that test (qualify) if your income is below the median. The income compared to the median is your gross income. Even if your income is above the median, you may still qualify for Chapter 7 relief you just have to complete the rest of the form.
    Answer Applies to: Texas
    Replied: 1/17/2014
    Paul Stuber, Attorney at Law
    Paul Stuber, Attorney at Law | Paul Stuber
    The means test goes by gross income.
    Answer Applies to: Colorado
    Replied: 1/17/2014
    William Bidwell, Attorney at Law | Bill Bidwell
    Estate, all your assets and liabilities.
    Answer Applies to: Michigan
    Replied: 1/17/2014
    Law Office of Lynnmarie A. Johnson
    Law Office of Lynnmarie A. Johnson | Lynnmarie Johnson
    I assume you are talking about the Means Test(whether you have to file a Ch. 13 or can go a Ch. 7) that goes by gross income. Your net income vs. your expenses is used to figure out whether or not you have enough excess income that you need to go a Ch. 13 and pay something to your creditors. If you don't have surplus money after you pay your regular expense, you can have a small amount, then you can go a Ch. 7.
    Answer Applies to: Michigan
    Replied: 1/17/2014
    Lynch Law Offices, P.C. | Roseanne N. Lynch
    The Means test begins with gross income and then allows for deductions which include taxes and other expenses. If you are looking at "median income" alone and you are close or over median income you should have an attorney run the Means test for you. There are also factors other than income which could determine which Chapter you can file.
    Answer Applies to: Illinois
    Replied: 1/17/2014
    Moore Taylor Law Firm, P.A.
    Moore Taylor Law Firm, P.A. | Jane Downey
    If you are talking about qualifying under the means test, use gross.
    Answer Applies to: South Carolina
    Replied: 1/17/2014
    Law Office of Stuart M. Nachbar, P.C.
    Law Office of Stuart M. Nachbar, P.C. | Stuart M. Nachbar
    The Means Test, which is what determines if you can file with or without a Presumption of Abuse first goes by the Gross Income, but if you fail under that, there are deductions that can be taken to get under the Median. Think of it as the difference between a 1040EZ Tax Return vs a Standard 1040.
    Answer Applies to: New Jersey
    Replied: 1/17/2014
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