Bankruptcy Means Test Calculator For Richmond, VA

What Is the Means Test?

What is the means test?

The 2005 bankruptcy law (BAPCPA) imposed a "means test" on who can file for Chapter 7 bankruptcy.

You might think this test prevents you from filing. But, chances are, you're wrong. Most people considering bankruptcy have no trouble passing the means test. Indeed, some lawyers think more people qualify for Chapter 7 under this test than under the old law, where judges had no fixed formula.

Use this calculator find out where you stand.

The Formula

The law now uses a standard mathematical formula to determine whether you can file for Chapter 7 -- or, to put it in legal terms, whether filing for Chapter 7 would be an 'abuse' of the bankruptcy system. (Those who fail the means test, are left with a Chapter 13 repayment plan as their only bankruptcy option.)

The means test is actually a two-part test and you only need to pass one of them to qualify for Chapter 7.

Test 1. "Median Income" (Form 22A-1)
This is a very simple test that compares your average household income for the past six calendar months to the median income for your state, If your income is below the median, you qualify for Chapter 7. If it is above the median, you must pass Test 2.

Test 2. "Disposable Income" (Form 22A-2)
This test deducts expenses from your income to determine how much you can pay your unsecured creditors over the next five years:

• If you can pay at least $13,650 ($227.50 per month), you can't file for Chapter 7.
• If you can pay at least $8,175 ( about $136.25 per month)
  • and that is at least 25% of what you currently owe your unsecured creditors, you can't file for Chapter 7.
• If your disposable income is less than $136.25 per month, you can file for Chapter 7.

Certain deductions are standard allowances based on the number of vehicles you operate, the number of people in your household, and the cost of living in .

In addition, to these standard deductions, you can also deduct the full amount of certain actual expenses such as mortgage and vehicle loan payments.

Do I Need to Complete the Means Test?

Do I need to complete the means test?

If you are filing for Chapter 13 bankruptcy, you do not need to complete the means test. However, you do need to complete a form almost identical to it — and that will determine how much you must pay in a Chapter 13 plan.

If you want to file for Chapter 7 bankruptcy, you must at least complete Form 22A-1 to figure your "current monthly income" (CMI), which is based on your average income over the past six calendar months. That number will determine whether you must complete the rest of the form.

If your CMI is below the median income for for a household your size, then you do not need to complete Form 22A-2.

If your CMI is higher than the median for for a household your size, you must complete Form 22A-2 to compute your monthly "disposable" income (that is, income minus expenses). The result of that computation will determine whether you are eligible for Chapter 7 bankruptcy.

How Long Does The Means Test Take?

How long does this take?

Using this calculator takes about 20 minutes. For some, the answer may be obvious after only a few questions.

Is it private?

This calculator is completely anonymous. We do not ask -- and no not want -- any personally identifying information linking you to these numbers, other than a zip code. We do keep statistical data on amounts that user have entered, so that the site may monitor the needs of its users and adjust services accordingly. However, To us, this is data for statistical analysis only. For more information. See the privacy notice.

Garbage in, garbage out

If you don't put in the correct numbers in the correct blanks, this calculator won't give you an accurate result. It only does the math. It is your responsibility to put the right numbers in the right blanks. Helpful resources are available throughout the test to help you figure out what the form is asking for and what to put where.

Be sure to account for all the different kinds of income you receive. If you're not sure what to put in an 'expense' blank, skip it. You may find that it doesn't' matter -- that is, you may qualify regardless of what number you put in that blank.

If you need assistance, this website offers advertisements from lawyers who can help.

Where to find the Official Means Test form

If you end up actually filing for Chapter 7 bankruptcy you need to fill out the new  Official Forms (22A-1, 22A-2), effective 12/1/2014. which you can find here. This calculator is based on that form.

How is "Household Size" Defined in the Bankruptcy Median Income Test?

Household Size: When is a family of 3 not a family of 3?

The issue of household size can be tricky in cases of shared custody, children who live at college part of the year, or non-custodial children living in the household.

There will undoubtedly be litigation on this subject. The official form seems to suggest that the issue is whether the person is part of the household and is a dependent. (That is, you can't include a roommate who is not your dependent in your household size, yet you may have to include the portion of their income that contributes to the overall income of the household. See the help topic on that subject. This can be an issue for same-sex couples who cannot legally marry.)

RELATED INFO:

In April 2010, the United States Trustee's office issued a PDF of their official position on legal issues surrounding each line of the Chapter 7 means test form 22A. Keep in mind that the Trustee tends to protect creditor interests, so a debtor's bankruptcy attorney may not agree with every one of these positions. That said, if you can easily pass the means test under the trustee's relatively stingy interpretation of the rules, all the better.

The U.S. Trustee's Office's official statement (released April 2010) on how to fill out form 22A takes the the following position on how to fill out the means test:

OLD FORM Line 14, (New form 22A-1, Line 13) Applicable median family income.

• "Applicable state" is state of residence at filing.
• If married and two different households, residence is where most family members reside.
• If no plurality of family members are in any one state, use state of spouse with highest income.
• "Household size" is the debtor, debtor's spouse, and any dependents that the debtor could claim under IRS dependency tests. The USTP uses the same IRS test for the definition of both"household" and "family." IRS Publication 501 explains the IRS tests for "dependent."
• The USTP departs from the IRS dependent test (as does the IRS when it determines family size for collection purposes) in cases justifying "reasonable exceptions" (e.g. a long standing economic unit of unmarried individuals and their children). However, if an individual is counted as a family member for median income purposes, that individual's income should be included as income on Part II of Form 22A .

OLD Form Line 8 (New Form 22A-1 Line 4) of the means test:

• Includes payments made monthly, quarterly, or annually.
• Includes payments regardless of written agreement with contributor.
• Includes payments from roommate, partner, parent, or relative, regardless of whether living with debtor.
• Includes payments made directly to creditors on behalf of debtor, e.g., rent, car, or insurance.
• Does not include payments from non-filing spouse (which are already included as income in Column B).

Contributions of Roommates or Domestic Partners to Household Income

Contributions of roommates or domestic partners to household income

At least one site on the web has addressed this issue. King's Bankruptcy Media (a lawyer's website) states what appears to be the correct rule: that, if a roommate or domestic partner is contributing income to the household, then that portion of the roommate's income must be included in the overall amount of 'household income' on line 4 of Form 22A-1, where it asks for "contributions to household income."

RELATED INFO:

The U.S. Trustee's Office's official statement (released April 2010) on how to fill out form 22A takes the the following position on how to fill out the means test:

Old Form Line 14 (New Form 22A-1 Line 13, Applicable median family income.

• "Applicable state" is state of residence at filing.
• If married and two different households, residence is where most family members reside.
• If no plurality of family members are in any one state, use state of spouse with highest income.
• "Household size" is the debtor, debtor's spouse, and any dependents that the debtor could claim under IRS dependency tests. The USTP uses the same IRS test for the definition of both"household" and "family." IRS Publication 501 explains the IRS tests for "dependent."
• The USTP departs from the IRS dependent test (as does the IRS when it determines family size for collection purposes) in cases justifying "reasonable exceptions" (e.g. a long standing economic unit of unmarried individuals and their children). However, if an individual is counted as a family member for median income purposes, that individual's income should be included as income on Part II of Form 22A .

Old Form Line 8 (New Form 22A-1, Line 4), Any amounts paid by another person or entity, on a regular basis, for the household expenses of the debtor or the debtor's dependents, including child or spousal support.

• Includes payments made monthly, quarterly, or annually.
• Includes payments regardless of written agreement with contributor.
• Includes payments from roommate, partner, parent, or relative, regardless of whether living with debtor.
• Includes payments made directly to creditors on behalf of debtor, e.g., rent, car, or insurance.
• Does not include payments from non-filing spouse (which are already included as income in Column B).

Median Income Test Notes

Median Income Test Explained

The bankruptcy law determines your income by looking at your household income during the six full calendar months before you file for bankruptcy.

Effect of the six-month income rule

If your income declined suddenly within the past six months and has not yet increased, waiting until after the first of the month to file will lower your monthly income figure used for the means test. That is, even if you don't qualify this month, you may qualify after the first of next month, or the month after that, if your income remains below the average monthly income for your state.

Effect of the number of people in your household

You may have noticed already that changing the number of persons in the household dramatically affects the median income figure. You can't include a roommate who is not your dependent in your household size, yet you may have to include the portion of their income that contributes to the overall income of the household. See the help topic on that subject.

If your six-month household income was more than 's median income for a household of your size, don't fret. Fill out Form B122A-2 (Expense Deductions).

You probably still qualify for Chapter 7, but you'll need to answer more questions to find out. Most people qualify once all factors are taken into account.

* If your six-month household income was less than the median for your state, consider this:

Complete Form B122A-1 of the calculator to make sure that you've properly computed your income. Although you are not legally required to complete Form B122A-2, the "expenses" part of the means test, it will give you a sense of how a judge or trustee might view your ability to pay.

Some judges look to your ability to pay as part of the "totality of the circumstances" test (Section 707(b)(3)), and will bar you from Chapter 7 bankruptcy, whether your income is above or below the median.

Bottom line: Whatever your income, if the calculator indicates that you have money left over after expenses, study the list of allowed expenses in the means test form and fill in any that apply.

Another thing to worry about: Some judges may rely on different required forms as guides in looking at the "totality of the circumstances" under 707(b)(3): Specifically Form B 106, Schedules I and J. These forms also deal with income and expenses but can yield a different "disposable income" result than the means test form (Form B122A) because different things are allowed and excluded on each form. Most notably, the means test income formula (and this calculator) excludes income from Social Security benefits, while Schedule I does not. Whether your Social Security income can render you ineligible for Chapter 7 is an unsettled area of law. At least one court has ruled that, by enacting the means test as it did, Congress intended that Social Security income be excluded when determining Chapter 7 eligibility; however, it still must be reported on Schedule I.

If you have significant income from Social Security benefits, be aware of this issue.

If I Pass the Means Test, Can I still be barred from filing bankruptcy?

If I Pass the Means Test, Can I still be barred from filing bankruptcy?

Yes, you can still be barred from filing Chapter 7 bankruptcy.

Passing the means test removes one barrier: it means that you are not "presumed" to be "abusing" the bankruptcy system under 707(b)(2).It is an essential first step, and for most people, that is that. They are clear to file.

However, in some cases, a bankruptcy judge may rule that case should be dismissed because to the "totality of the circumstances" under707(b)(3).

Example 1: In Iowa, a judge ruled that a debtor was abusing the system because in the year preceding his bankruptcy, he received substantial sums of money from various sources and spent it all on unnecessary indulgences, rather than pay down his debt. In re James, 345 B.R. 664 (Bkrtcy.N.D.Iowa 2006).

And, while the means test income analysis looks backward, a court can use 707(b)(3) to look forward.

Example 2: In another example, a Northern California court denied a debtor the right to file Chapter 7 because the debtor was about to have a substantial increase in income. In re Pak, 343 B.R. 239 (Bkrtcy.N.D.Cal. 2006).

 

If I fail the Means Test, can a judge allow me to file anyway?

If I fail the Means Test, can a judge allow me to file anyway?

Yes, a judge can allow you to file for Chapter 7 bankruptcy even if you fail the means test, but only you are able able to show "special circumstances."

Some examples of possible "special circumstances" are job loss or pay cut, a serious medical condition, or unusually high child care expenses.  You must be able to produce proof of your expenses and that your expenses are reasonable -- and that you have no reasonable alternative.

What are "priority claims"?

What are "priority claims"?

This is a technical term used in bankruptcy law, and refers to what debts must be paid before all other debts (after administrative expenses).

A list of the most common priority claims can be found on Form 10 (Proof of Claim). These include

• past due debts for child and spousal support,
• most unpaid taxes, and wages,
• salaries or commissions you owe to employees and
• contributions you owe to an employee benefit fund.

The full definition of the nine types of priority debt is found in section 507(a) of the bankruptcy code.

(a)The following expenses and claims have priority in the following order:

(1)First:

(A)

Allowed unsecured claims for domestic support obligations that, as of the date of the filing of the petition in a case under this title, are owed to or recoverable by a spouse, former spouse, or child of the debtor, or such child’s parent, legal guardian, or responsible relative, without regard to whether the claim is filed by such person or is filed by a governmental unit on behalf of such person, on the condition that funds received under this paragraph by a governmental unit under this title after the date of the filing of the petition shall be applied and distributed in accordance with applicable nonbankruptcy law.

(B)

Subject to claims under subparagraph (A), allowed unsecured claims for domestic support obligations that, as of the date of the filing of the petition, are assigned by a spouse, former spouse, child of the debtor, or such child’s parent, legal guardian, or responsible relative to a governmental unit (unless such obligation is assigned voluntarily by the spouse, former spouse, child, parent, legal guardian, or responsible relative of the child for the purpose of collecting the debt) or are owed directly to or recoverable by a governmental unit under applicable nonbankruptcy law, on the condition that funds received under this paragraph by a governmental unit under this title after the date of the filing of the petition be applied and distributed in accordance with applicable nonbankruptcy law.

(C)

If a trustee is appointed or elected under section 701, 702, 703, 1104, 1202, or 1302, the administrative expenses of the trustee allowed under paragraphs (1)(A), (2), and (6) of section 503(b) shall be paid before payment of claims under subparagraphs (A) and (B), to the extent that the trustee administers assets that are otherwise available for the payment of such claims.

(2)

Second, administrative expenses allowed under section 503(b) of this title, unsecured claims of any Federal reserve bank related to loans made through programs or facilities authorized under section 13(3) of the Federal Reserve Act (12 U.S.C. 343),[1] and any fees and charges assessed against the estate under chapter 123 of title 28.

(3)

Third, unsecured claims allowed under section 502(f) of this title.

(4)Fourth, allowed unsecured claims, but only to the extent of $10,000 [2] for each individual or corporation, as the case may be, earned within 180 days before the date of the filing of the petition or the date of the cessation of the debtor’s business, whichever occurs first, for—

(A)

wages, salaries, or commissions, including vacation, severance, and sick leave pay earned by an individual; or

(B)

sales commissions earned by an individual or by a corporation with only 1 employee, acting as an independent contractor in the sale of goods or services for the debtor in the ordinary course of the debtor’s business if, and only if, during the 12 months preceding that date, at least 75 percent of the amount that the individual or corporation earned by acting as an independent contractor in the sale of goods or services was earned from the debtor.

(5)Fifth, allowed unsecured claims for contributions to an employee benefit plan—

(A)

arising from services rendered within 180 days before the date of the filing of the petition or the date of the cessation of the debtor’s business, whichever occurs first; but only

(B)for each such plan, to the extent of—

(i)

the number of employees covered by each such plan multiplied by $10,000; ² less

(ii)

the aggregate amount paid to such employees under paragraph (4) of this subsection, plus the aggregate amount paid by the estate on behalf of such employees to any other employee benefit plan.

(6)Sixth, allowed unsecured claims of persons—

(A)

engaged in the production or raising of grain, as defined in section 557(b) of this title, against a debtor who owns or operates a grain storage facility, as defined in section 557(b) of this title, for grain or the proceeds of grain, or

(B)

engaged as a United States fisherman against a debtor who has acquired fish or fish produce from a fisherman through a sale or conversion, and who is engaged in operating a fish produce storage or processing facility—

but only to the extent of $4,000 ² for each such individual.

(7)

Seventh, allowed unsecured claims of individuals, to the extent of $1,800 ² for each such individual, arising from the deposit, before the commencement of the case, of money in connection with the purchase, lease, or rental of property, or the purchase of services, for the personal, family, or household use of such individuals, that were not delivered or provided.

(8)Eighth, allowed unsecured claims of governmental units, only to the extent that such claims are for—

(A)a tax on or measured by income or gross receipts for a taxable year ending on or before the date of the filing of the petition—

(i)

for which a return, if required, is last due, including extensions, after three years before the date of the filing of the petition;

(ii)assessed within 240 days before the date of the filing of the petition, exclusive of—

(I)

any time during which an offer in compromise with respect to that tax was pending or in effect during that 240-day period, plus 30 days; and

(II)

any time during which a stay of proceedings against collections was in effect in a prior case under this title during that 240-day period, plus 90 days; or

(iii)

other than a tax of a kind specified in section 523(a)(1)(B) or 523(a)(1)(C) of this title, not assessed before, but assessable, under applicable law or by agreement, after, the commencement of the case;

(B)

a property tax incurred before the commencement of the case and last payable without penalty after one year before the date of the filing of the petition;

(C)

a tax required to be collected or withheld and for which the debtor is liable in whatever capacity;

(D)

an employment tax on a wage, salary, or commission of a kind specified in paragraph (4) of this subsection earned from the debtor before the date of the filing of the petition, whether or not actually paid before such date, for which a return is last due, under applicable law or under any extension, after three years before the date of the filing of the petition;

(E)an excise tax on—

(i)

a transaction occurring before the date of the filing of the petition for which a return, if required, is last due, under applicable law or under any extension, after three years before the date of the filing of the petition; or

(ii)

if a return is not required, a transaction occurring during the three years immediately preceding the date of the filing of the petition;

(F)a customs duty arising out of the importation of merchandise—

(i)

entered for consumption within one year before the date of the filing of the petition;

(ii)

covered by an entry liquidated or reliquidated within one year before the date of the filing of the petition; or

(iii)

entered for consumption within four years before the date of the filing of the petition but unliquidated on such date, if the Secretary of the Treasury certifies that failure to liquidate such entry was due to an investigation pending on such date into assessment of antidumping or countervailing duties or fraud, or if information needed for the proper appraisement or classification of such merchandise was not available to the appropriate customs officer before such date; or

(G)

a penalty related to a claim of a kind specified in this paragraph and in compensation for actual pecuniary loss.

An otherwise applicable time period specified in this paragraph shall be suspended for any period during which a governmental unit is prohibited under applicable nonbankruptcy law from collecting a tax as a result of a request by the debtor for a hearing and an appeal of any collection action taken or proposed against the debtor, plus 90 days; plus any time during which the stay of proceedings was in effect in a prior case under this title or during which collection was precluded by the existence of 1 or more confirmed plans under this title, plus 90 days.

(9)

Ninth, allowed unsecured claims based upon any commitment by the debtor to a Federal depository institutions regulatory agency (or predecessor to such agency) to maintain the capital of an insured depository institution.

(10)

Tenth, allowed claims for death or personal injury resulting from the operation of a motor vehicle or vessel if such operation was unlawful because the debtor was intoxicated from using alcohol, a drug, or another substance.

(b)

If the trustee, under section 362, 363, or 364 of this title, provides adequate protection of the interest of a holder of a claim secured by a lien on property of the debtor and if, notwithstanding such protection, such creditor has a claim allowable under subsection (a)(2) of this section arising from the stay of action against such property under section 362 of this title, from the use, sale, or lease of such property under section 363 of this title, or from the granting of a lien under section 364(d) of this title, then such creditor’s claim under such subsection shall have priority over every other claim allowable under such subsection.

(c)

For the purpose of subsection (a) of this section, a claim of a governmental unit arising from an erroneous refund or credit of a tax has the same priority as a claim for the tax to which such refund or credit relates.

(d)

An entity that is subrogated to the rights of a holder of a claim of a kind specified in subsection (a)(1), (a)(4), (a)(5), (a)(6), (a)(7), (a)(8), or (a)(9) of this section is not subrogated to the right of the holder of such claim to priority under such subsection.

(Pub. L. 95–598, Nov. 6, 1978, 92 Stat. 2583; Pub. L. 98–353, title III, §§ 350, 449, July 10, 1984, 98 Stat. 358, 374; Pub. L. 101–647, title XXV, § 2522(d), Nov. 29, 1990, 104 Stat. 4867; Pub. L. 103–394, title I, § 108(c), title II, § 207, title III, § 304(c), title V, § 501(b)(3), (d)(11), Oct. 22, 1994, 108 Stat. 4112, 4123, 4132, 4142, 4145; Pub. L. 109–8, title II, §§ 212, 223, title VII, §§ 705, 706, title XIV, § 1401, title XV, § 1502(a)(1), Apr. 20, 2005, 119 Stat. 51, 62, 126, 214, 216; Pub. L. 111–203, title XI, § 1101(b), July 21, 2010, 124 Stat. 2115; Pub. L. 111–327, § 2(a)(15), Dec. 22, 2010, 124 Stat. 3559.)

Line by Line Means Test Positions of the U.S. Trustee 4/23/2010

STATEMENT OF THE U.S. TRUSTEE PROGRAM'S POSITION ON LEGAL ISSUES ARISING UNDER THE CHAPTER 7 MEANS TEST

April 23, 2010 (original source: http://www.justice.gov/ust/eo/bapcpa/docs/ch7_line_by_line.pdf)

Following is a line-by-line summary of Form B 122A and various recurring disposable income issues likely to arise in chapter 7 under the BAPCPA provisions of 11 U.S.C. § 707(b). The summary gives the position of the United States Trustee Program (USTP) on these issues. For ease of reference, the USTP positions are listed in summary fashion without citation to legal authority. The referenced lines are those on the Form B 122A. Unless a circuit court has decided an issue to the contrary, United States Trustees should, absent unusual circumstances, maintain these positions when interpreting section 707(b).

Line 1A, Declaration of Disabled Veterans

New Form B 122A-1Supp, Line 2

• Must have at least 30% disability from service or released/discharged due to disability.
• Debt primarily incurred during period of active duty/homeland defense activity.
• Only if BOTH conditions apply is debtor exempt from further completing Form B 122A.

Line 1B, Declaration of Non-Consumer Debts

New Form B 122A-1Supp, Line 1

• Less than 50% of total scheduled debt was incurred for personal, household or family purposes.
• Purpose of debt is judged at the time the debt was incurred.
• Home mortgages are typically consumer debt.
• Most tax debts are not typically consumer debt.

Line 1C, Declaration of Reservists and National Guard Exclusion

New Form B 122A-1Supp, Line 3

• Must be either a member of a reserve component or National Guard; AND
• Must have been on active duty or performing a homeland defense activity for at least 90 days.
• Exclusion applies after the minimum 90 day period of service, and for 540 days after the service ends.
• Exclusion applies only to cases filed between December 19, 2008 and December 18, 2011, unless extended by Congress.

Line 2, Filing Status.

New Form B 122A-1, Line 1

• The only four options permitted are those listed on the Form B 122A.
• No option for legally separated but filing joint case; joint cases generally should be treated as a single household for means test purposes.
• May be asserted as special circumstances to rebut the presumption of abuse under section 707(b)(2)(B).
• May be considered by the UST when stating the reasons under section 704(b)(2) that a motion to dismiss is not appropriate. .
• Information should be consistent with household size on Schedule I.

Line 3, Gross wages, salary, tips, bonuses, overtime, commissions.

New Form B 122A-1, Line 2

• Includes pay/shift differentials.
• Includes income, whether or not taxable.
• Figures are gross amounts, before any deductions.

Lines 4 & 5, Business and real property income and expenses.

New Form B 122A-1, Lines 5 & 6

• Must be "ordinary and necessary," i.e., a reasonable operating expense.
• Depreciation is not included.
• Line "c" cannot be a negative number. 

Line 6, Interest, dividends, and royalties.

New Form B 122A-1, Line 7

• Includes automatic dividend reinvestment program.

Line 7, Pension and retirement income.

New Form B 122A-1, Line 9

• Does not include Social Security payments
• Includes all other retirement, including government, 401(k), and IRA.

Line 8, Any amounts paid by another person or entity, on a regular basis, for the household expenses of the debtor or the debtor's dependents, including child or spousal support.

New Form B 122A-1, Line 4

• Includes payments made monthly, quarterly, or annually.
• Includes payments regardless of written agreement with contributor.
• Includes payments from roommate, partner, parent, or relative, regardless of whether living with debtor.
• Includes payments made directly to creditors on behalf of debtor, e.g., rent, car, or insurance.
• Does not include payments from non-filing spouse (which are already included as income in Column B).

Line 9, Unemployment compensation.

New Form B 122A-1, Line 8

• Unemployment compensation is not a "benefit under SSA" and should be included; USTP opposes any entry in the boxes to the left of Columns A and B.

Line 10, Income from all other sources.

New Form B 122A-1, Line 10

• Includes net gambling, cash gifts, litigation proceeds, and trust income.
• Includes private disability income.
• Does not include SSA benefits.
• Does not include tax refunds.
• Does not include loan proceeds.
• Whether it meets IRS test for income could be relevant, but whether it is taxable income or non-taxable income is not a factor.

Line 14, Applicable median family income.

New Form B 122A-1, Line 13

• "Applicable state" is state of residence at filing.
• If married and two different households, residence is where most family members reside.
• If no plurality of family members are in any one state, use state of spouse with highest income.
• "Household size" is the debtor, debtor's spouse, and any dependents that the debtor could claim under IRS dependency tests. The USTP uses the same IRS test for the definition of both "household" and "family." IRS Publication 501 explains the IRS tests for "dependent."
• The USTP departs from the IRS dependent test (as does the IRS when it determines family size for collection purposes) in cases justifying "reasonable exceptions" (e.g. a long standing economic unit of unmarried individuals and their children). However, if an individual is counted as a family member for median income purposes, that individual's income should be included as income on Part II of Form B 122A .

Line 17, Marital adjustment.

New Form B 122A-2, Line 3

• All income of the non-debtor spouse should be included, except the following expenses of the non-debtor spouse may be excluded:
• withholding taxes;
• student loan payments;
• prior support obligations;
• debt payments on which only the non-filing spouse is legally liable and where the consideration for the loan exclusively benefits the non-filing spouse. (Credit cards used to pay for household expenses may not be deducted on Line 17).

Line 19A, National Standards: food, apparel and services, housekeeping supplies, personal care, and miscellaneous.

New Form B 122A-2, Line 6

• The following expenses are covered by the National Standards and may not be counted separately elsewhere:
  • apparel and services (includes shoes and clothing, laundry and dry cleaning, and shoe repair);
  • meals at home or away (unless unreimbursed business expenses);
  • housekeeping supplies (includes laundry and cleaning supplies; other household products such as cleaning and toilet tissue, paper towels and napkins; lawn and garden supplies; postage and stationary; and other miscellaneous household supplies);
  • personal care products and services (includes hair care products, haircuts and beautician services, oral hygiene products and articles, shaving needs, cosmetics, perfume, bath preparations, deodorants, feminine hygiene products, electric personal care appliances, personal care services, and repair of personal care appliances)
  • miscellaneous personal expenses.
• National Standard amount that may be claimed is based on the debtor, the debtor's dependents, and the debtor's spouse in a joint case if the spouse is not otherwise a dependent.

Line 19B, National Standards: health care.

New Form B 122A-2, Line 7

• National Standard amounts may be claimed based on debtor, debtor's dependents, debtor's spouse, and the age of household members.
• Actual mounts expended by the debtor exceeding the National Standards that are required for the health and welfare of the debtor, debtor's dependents, and debtor's spouse, which are not reimbursed by insurance or paid by a health savings account, may be claimed on line 31.

Line 20A, Local Standards: housing and utilities; non-mortgage expenses.

New Form B 122A-2, Line 8

• Based on county of residence; see line 14 for resolving multiple residences.
• The following expenses are covered by the Local Standards and may not be counted elsewhere:
• maintenance and repair;
• homeowner association dues;
• condominium fees;
• gas, electricity, water, heating oil, bottled gas, trash and garbage collection, wood and other fuels, septic cleaning;
• basic telephone and cell phone service.

Line 20B, Local Standards: housing and utilities, mortgage/rent expense.

New Form B 122A-2, Line 9

• Based on county of residence; see line 14 for resolving multiple residences.
• The following are included in the Local Standard and may not be counted elsewhere, except as provided on lines 42 and 43:
  • principal and interest on mortgage loan;
  • rent;
  • homeowners/renters insurance;
  • local property taxes.
• Line 20B(b) is the same figure as line 42 for house payments.
• Debtor may not "double dip," that is take the full amount of the Local Standard for mortgage/rent on line 20B(a) and then fail to deduct the monthly mortgage payment on line 20B(b). The overall effect of disallowing double-dipping is to allow the debtor to take only the higher of the actual mortgage payment or the Local Standard.
• If the home is being surrendered, the debtor may not include the mortgage payment on lines 42 and 43, and may not deduct the mortgage payment on line 20B(b). The debtor may, however, claim the full amount of the Local Standard for housing on line 20A.
• Debtors and joint debtors are entitled to only one Local Standard mortgage/rent payment, even if maintaining two separate households.
• Vacation homes do not entitle a debtor to the Local Standard on line 20B.
• Debtor may not claim a Local Standard on line 20B when the debtor:
  • is and has been living with a friend or relative for an extended period of time at no cost;
  • is and has been living in military or other employer-paid housing.

Line 21, Local Standards: housing and utilities; adjustment.

New Form B 122A-2, Line 10

• This line is often used improperly by debtors to claim housing expenses in excess of the IRS standards; USTP policy is to object to that use of line 21.
• This line is occasionally used by debtors who claim that Form B 122A incorrectly captures the separation of the IRS housing Local Standard into two components, a mortgage component and a non-mortgage component; the USTP will object to that use of line 21.

Line 22A, Local Standards: transportation, vehicle operation/public transportation expense.

New Form B 122A-2, Lines 11, 12, 13, 14, 15

• Based on metro area or region.
• See line 14 to resolve multiple residences.
• The Local Standard for vehicle operation may be taken when the debtor owns, leases, or pays the operating expenses on a vehicle.
• The Local Standard for vehicle operation for zero vehicles may be taken if the debtor does not own, operate, or pay operating expenses on any vehicle.
• A vehicle must be "street ready" and licensable.
• A vehicle designed without an engine does not qualify, e.g., camper or trailer.
• Debtors located outside of the Fifth, Seventh, and Eighth Circuits who operate vehicles not subject to a loan or lease may deduct an additional $200 if the vehicle is owned by the debtor, and is older than six (6) model years or has more than 75,000 miles.

Line 22B, Local Standards: transportation, additional public transportation expense.

New Form B 122A-2, Line 15

• If debtor claims vehicle operating expense for one or more vehicles on Line 22A, debtor may only claim additional public transportation expense if reasonable and necessary for the health and welfare of the debtor, debtor's dependents, and debtor's spouse, or for the production of income.
• If additional public transportation expense is applicable, it is capped by Local Standard amount for public transportation.

Lines 23 & 24, Local Standards: transportation ownership/lease expenses.

New Form B 122A-2, Line 13

• Outside the Fifth, Seventh, and Eighth circuits, debtor cannot claim the vehicle ownership expense if the debtor does not have a secured loan or a lease on the vehicle.
• In the Fifth, Seventh, and Eighth circuits debtor may claim this expense if the debtor owns a vehicle regardless of whether the debtor has a loan or lease payment. However, if the debtor owns a vehicle free and clear the USTP position is that the lack of any actual ownership expense may be considered in determining whether the case constitutes an abuse under the totality of the debtor's financial circumstances pursuant to section 707(b)(3)(B).
• If the vehicle is being surrendered without replacement, the debtor may not claim the expense. But see discussion regarding line 42.
• If the vehicle is borrowed, the debtor may not claim the expense.
• Debtor may not "double dip," that is take the full amount of the vehicle ownership expense on line 23(a) and then fail to deduct the monthly lien payment on line 23(b). The overall effect is to allow the debtor to take the higher of the actual loan or lease payment and vehicle ownership expense.
• A debtor whose household contains a single driver is generally entitled to an ownership expense for only one vehicle.

Line 25, Other Necessary Expenses: taxes.

New Form B 122A-2, Line 16

• Based on monthly amount of actual taxes owed, not taxes withheld.
• Includes FICA, Social Security, Medicare, state and local taxes.
• Non-debtor spouse's taxes is not included if "backed out" on line 17.

Line 26, Other Necessary Expenses: involuntary deductions for employment.

New Form B 122A-2, Line 17

• Includes retirement, union dues, uniform costs, work shoes.
• Does not include voluntary 401(k) contributions, voluntary 401(k) loan repayments,
• Does not include United Way or charitable contributions.
• Does not include elective insurance.

Line 27, Other Necessary Expenses: life insurance.

New Form B 122A-2, Line 18

• Includes only amounts for term insurance on the debtor's life.
• If the policy is whole life, debtor must determine what portion of the premium is attributable to term coverage.
• Does not include premiums on policies for non-debtor spouse or children.

Line 28, Other Necessary Expenses: court-ordered payments.

New Form B 122A-2, Line 19

• Includes the current monthly amount of support and alimony, not any past due amounts, which are entered on line 44.
• Does not include purely voluntary amounts for which there is no legal obligation.

Line 29, Other Necessary Expenses: education for employment or for a physically or mentally challenged child.

New Form B 122A-2, Line 20

• Employment education must be as a condition of employment.
• Expenses for challenged children must be for "health or welfare."
• Expenses for challenged children cannot be otherwise provided by public school system.
• Expenses for challenged children cannot be already included on line 30 or 38.

Line 30, Other Necessary Expenses: childcare.

New Form B 122A-2, Line 21

• These are actual expenses only.
• Includes babysitting, nursery school, daycare, preschool.
• Premium daycare may be permitted, depending on the justification.
• May not be permitted if one parent is "stay at home;" depends on the circumstances.

Line 31, Other Necessary Expenses: health care.

New Form B 122A-2, Line 22

• Includes only unreimbursed, out-of-pocket expenses, exceeding the National Standard amounts provided for at line 19B, including items traditionally reimbursable through a flexible spending or "cafeteria" medical saving plan. For example:
  • deductibles
  • medications
  • therapy
  • co-pays
• Does not include payments for health insurance or health savings account; those are covered by line 34.
• Does not include elective or cosmetic surgery.
• May not duplicate items on line 34.

Line 32, Other Necessary Expenses: telecommunication services.

New Form B 122A-2, Line 23

• Does not include basic phone or cell service, which is included in the Local Standards on line 20A.
• Pagers, call waiting, long distance, caller ID, and internet may be included, depending on amount and circumstance; test is whether "necessary for health and welfare or production of income."
• Does not include business expenses already deducted on line 4b or 5b.

Line 34, Health Insurance, Disability Insurance, and Health Savings Account Expenses.

New Form B 122A-2, Line 25

• Includes actual expense for debtor, spouse, and dependents.
• Does not include flexible spending account or "cafeteria" medical saving plan contributions, which should be deducted as excess costs on line 31 to the extend they exceed to line 19B IRS standard amounts.

Line 35, Continued contributions to the care of household or family members.

New Form B 122A-2, Line 26

• Includes only actual, not anticipated expenses.
• Family member must live with the debtor or be a member of the debtor's immediate family, i.e., parent, grandparent, sibling, child, grandchild.
• Elderly, chronically ill, or disabled person must be unable to pay the expense.

Line 36, Protection against family violence.

New Form B 122A-2, Line 27

• Include only ongoing expenses related to a real threat.
• Legal costs related to a restraining order may qualify.
• Home security system costs will not qualify in all cases.
• Nature of expense, but not the amount, must be kept confidential by the court.

Line 37, Home energy costs.

New Form B 122A-2, Line 28

• Insert the amount by which the twelve-month average home energy costs exceed line 20A.
• Amount claimed is unlimited, but must be documented.

Line 38, Education expenses for dependent children under 18.

New Form B 122A-2, Line 29

• Includes public or private elementary or secondary education.
• Does not include college or preschool education.
• Child must be under 18 at filing.
• Amount may not exceed $147.92 per child.
• Expenses must be documented.
• Cannot duplicate expenses claimed on line 30.
• Does not include school lunches, which are included in National Standards on line 19A.
• Can include home schooling expenses.

Line 39, Additional food and clothing expense.

New Form B 122A-2, Line 30

• The USTP Web site breaks out the food/clothing standard for application of the 5 percent limit.
• Expenses must be actual, not merely anticipated.
• Special dietary and allergy restrictions can be covered.
• Documentation is required.

Line 40, Continued charitable contributions.

New Form B 122A-2, Line 31

• Contribution is limited to 15 percent of gross income.
• The USTP position is that charitable contributions under section 707(b) are available to both below median and above median debtors. The Religious Liberty and Charitable Donation Clarification Act of 2006, Pub. L. 109-439 clarifies the Bankruptcy Code to ensure that above-median debtors may make continued charitable contributions.

Line 42, Future payments on secured claims.

New Form B 122A-2, Line 33

• Total all payments coming due in the 60 months following filing and divide by 60.
• In the case of a variable rate loan, use the loan rate in effect on the petition date tocalculate the payments.
• In the case of a "balloon" payment within 60 months, use the full amount of theballoon to calculate the average payment.
• Does not include property subject to a lease rather than a loan.
• Includes all secured debt, even "toys" and luxury items. Although the USTP positionis to allow secured payments for luxury items on this line, the Program believes that luxury expenses may demonstrate that a petition was filed in bad faith warranting dismissal of the case under section 707(b)(3)(A), and may be considered in determining the totality of the debtors financial circumstances under section 707(b)(3)(B).
• Includes a secured loan payment, even when the value of the collateral is less than the amount of the loan.
• Outside the First Circuit, does not include payments when the debtor intends to surrender the collateral securing the loan.
• In the First Circuit, debtor may include payments on line 42 when the debtor intends to surrenderthecollateralsecuringtheloan. However,theUSTPpositionisthatthe failure of the debtor to continue to make the payments post-petition in surrendering the property may be considered in determining the totality of the debtor's financial circumstances under section 707(b)(3)(B).

Line 43, Other payments on secured claims.

New Form B 122A-2, Line 34

• Does not include arrearage on luxury items; the item must be "necessary for the support of the debtor or dependents."
• See line 42 for a discussion of when the collateral is surrendered.

Line 44, Payments on prepetition priority claims.

New Form B 122A-2, Line 35

• The total of priority debt includes only amounts due as of filing.
• Does not include figures already listed on line 28.

Line 45, Chapter 13 administrative expenses.

New Form B 122A-2, Line 36

• Debtor must project a hypothetical chapter 13 plan payment to calculate the figure on line 45a. The USTP does not insist on mathematical exactitude and allows a reasonable estimation of the hypothetical chapter 13 plan payment.
• Generally the plan payment should be calculated based on the amount of monthly disposable income suggested by the completion of the means test, or shown on Schedules I and J.
• The multiplier for line 45b is found on the USTP Web site by state.

Line 56, Other Expenses.

New Form B 122A-2, Line 43

• Generally this line should be used to assert special circumstances to rebut the presumption of abuse under section 707(b)(2)(B).
• Also may provide information for the UST to consider under section 704(b)(2) when determining whether a motion to dismiss is appropriate.
• Should not be included by debtor in calculating disposable income on line 51, or in determining whether the presumption of abuse arises on lines 52-55.