Means Test: Good Enough Isn’t Good Enough

Early in the life of BAPCPA, I sat down to review a means test with a new bankruptcy lawyer.   The first part of the form seemed to be complete and make sense, but as I worked my way deeper into the document, unexpected lines were blank, or numbers were small relative to my expectations.

Doesn’t the client have health care expenses, taxes, internet service, I asked?  The reply:  I’ve gotten to a negative number, so I stopped.

I’m sorry, but that doesn’t cut it. Why?

  • What if you’ve made a mistake in the things you’ve put on the B-22 and the real numbers don’t yield a negative?
  • As a bankruptcy professional, do you want to tell the client and the world you do only as much work as you think necessary?
  • The client signs it under penalty of perjury.

Any one of these reasons justifies doing the job as well as you can.  I know that it seems to be an exercise in make-work, not necessarily connected to the real world.  But we’re stuck with it until Congress changes it.

It drives what our clients have to pay for five years.  Five years of our client’s life ought to be worth doing the job right.  If something changes, a mistake is found, or an item of income or expenses are disallowed, how are you going to put a good face on new numbers that vary wildly from your first filed B-22 when you include all the items called for on the form?

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  1. I happened to me early in my practice. You have to complete the means test.

  2. http://Seth%20R. says

    The way I view the Means Test is as a way for me to warn the US Trustee’s office away from picking my client as candidate for a dismissal action.

    This means that you definitely claim as many deductions as you honestly can.

    For example, even though I know that the US Trustee’s office doesn’t like us claiming both the vehicle ownership and the vehicle operating expense deductions on the Means Test when there is no car payment being made (i.e. no car loan), I still claim both in every single Means Test I file on the theory that people need to be able to budget for when their piece-of-junk vehicle kicks the bucket (among other reasons).

    It’s just one extra thing the Trustee will have to overcome if a legal challenge is ever made to my Chapter 7 filing.

    Another example is when I had a single guy who was over the median, but still passed the Means Test. But he’d recently been on active duty in the military and qualified for the military exemption from taking the Means Test. So, I claimed the military exemption. Again, it was just one more hurdle for the Trustee to overcome.

    I also make sure to get my clients as far in the red as possible on schedules I and J (yet one more place the US Trustee sometimes points to in making a challenge). If they aren’t in the red, I look for additional explanation to put on the line where it asks for any anticipated increase in expenses.

    In the vast majority of my filings, I don’t leave that line blank. The Trustee doesn’t want to waste their time and resources anymore than you do – and the “other” line is a wonderful place to warn them off.

    If you’re client is living with mom and dad at reduced rent – let the Trustee know, and suggest that rent will increase when the debtor finds a new place to live. If they don’t have health insurance (a lot of my clients), let the trustee know that they really need to be incurring that new expense in the future (even if your client doesn’t have the funds to do so now). There’s a lot of good honest data you can provide here to warn off the UST office. So make use of it.

    I like to think of it as painting a big “don’t mess with me” sign on my filed petitions. Make the honest case that this Chapter 7 filing will not be worth the investment of Trustee resources to challenge.