Jacksonville Bankruptcy Lawyer Blog
I have written many blog posts over the years concerning the MEANS test in Jacksonville, Florida and the deductions that can be used. To jog your memory, the MEANS test is required when your income is above the median income in your state for your household size. It is meant to prohibit high-income households from filing a Chapter 7 bankruptcy. The MEANS test allows you to deduct specific expenses that can help you qualify. The MEANS test is also used to determine your disposable income in a Chapter 13 Bankruptcy, which in turn determines your Chapter 13 Plan and your monthly payments. But what types of expenses can be deducted on the MEANS test?
First, it is important to note that some expenses have predetermined amounts. Expenses such as food, utilities, housing and other necessary monthly expenses are predetermined by IRS local and national standards unless you have extenuating circumstances.
Expenses that can help you pass the MEANS test.
Court ordered payments such as alimony or child support.
Monthly mortgage and car loan payments. Instead of only being allowed the IRS standard for housing and car ownership, you can deduct your actual monthly mortgage payment and/or car payment. However, be weary as the amount allowed is the average amount due over the next 60 months. For example, your monthly car payment is $500 per month, and you have three years left on your car loan, which is only 36 months. Instead of being able to use the full $500 per month, you would only be able to deduct $300 per month on your MEANS test.
Involuntary employment expenses. If your employer requires you to pay such things as union dues, mandatory retirement contributions, etc. these amounts can be deducted from the MEANS test since they are not voluntary expenses and are necessary for your employment.
Child care expenses. Monthly expenses for day care, preschool or babysitting can all be used as a deduction.
Term Life Insurance. The actual monthly amount you pay for any Term Life Insurance policy can also be used as a deduction.
Expenses for a chronically ill, elderly or disabled family member.
Continuing charitable contributions. As long as you can show a long history of your recurring charitable contributions, they can be used on the MEANS test.
Educational expenses required for employment or a disabled child.
However, keep in mind that you must be prepared to show and prove these types of expenses and in some instances be able to show that there is a long history of such expenses. It is also imperative to note that many of the expenses listed above, are generally not huge monthly expenses but they might be just enough to help you pass the MEANS test if you are just over the median income required.
If you are thinking of filing bankruptcy because your debt is more than you can handle, a great place to start is determining whether or not you qualify for a Chapter 7 bankruptcy and whether you will have to take the MEANS test. Contact the Law Office of David M. Goldman, PLLC today for a free initial 30-minute consultation.