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138 Best Case Bankruptcy for Windows
User’s Guide
Chapter 7: Comparing the Debtor’s Income with the
Median
Median Tab for a Chapter 13 Debtor with Income
Above the MedianMedian Income: The means test
st
calculator automatically fills in the comparable state
median, which is determined by the state of
residence and the household size you selected in the
General tab. Median incomes are based on Census
Bureau numbers, and are adjusted for inflation and
published by the U.S. Trustee. We calculate the
debtor’s annualized income and compare with the
median for you, then display the result.
Additional Information: The Median tab contains
s
two buttons which display information you may
find helpful as you review the debtor's CMI and
how it compares to the median income:
o
The Wait to File? button may be helpful for
or
debtors with variable income. If your client is
above the median income, it shows how much
less per month would need to be earned if you
waited 1-6 months to file. If your client is
is
below, it shows how much extra could be
earned for the debtor to still fall below median.
o
The Show Table button next to line 14 allows
ws
you to view all median income values for this
state.
Above or Below the Median: In most cases, the
e
debtor's income will fall below the median, and
there is no presumption of abuse. If this is the case,
you do not need to complete the full means test.
However, if the debtor's income exceeds the
median, then the full test must be completed. For
these cases, more tabs appear at the top of the
window. You’ll enter expenses in these tabs to
determine disposable monthly income. In addition,
the CMI Summary at the bottom of the screen
Chapter 13: Determining the Commitment Period and
Disposable Income
Part II Calculation of § 1325 (b)(4) Commitment
Period
looks first at the debtor’s annualized current
monthly income.
If the debtor is married and not filing jointly, and
d
you, as the attorney, contend that the code does not
require that the non-
filing spouse’s income be
included, you can deduct the amount of the spouse’s
income that was not regularly contributed to the
household from the debtor’s CMI. This is c
alled a
marital adjustment.
The CMI (with marital adjustment removed, if
applicable), is then compared with the state
median for this household size.
o
If the debtor’s income is
below the state
median for his household size, the applicable
e
commitment period for the Chapter 13 Plan
n
is three years, and the debtor does not
complete the rest of the form. For these
debtors, and in most geographic areas, most
debtors will fall into this category, the form
will not be used to determine the disposable
monthly income.
o
If the debtor’s income is
above the state
median, the applicable commitment is five
e
years, and the debtor must complete Part III,
where we again do a comparison with the state
median.
Part III Application of 1325(b)(3) for
Determining Disposable Income takes the Current
Monthly Income and subtracts the marital
adjustment if the debtor is married and not filing
jointly. (Whereas Part II leaves room for
interpretation of whether the marital adjustment
should be subtracted, Part III specifically directs