Bankruptcy Overview

Means Testing in Bankruptcy

Detroit Bankruptcy Attorney Walter Metzen

Detroit Chapter 7 and Chapter 13 Consumer Bankruptcy Filings

Michigan Credit Card Debt Lawyer

 I, Walter Metzen, will provide, free of charge as part of your free initial Bankruptcy Analysis, a means test calculation to determine if you are eligible for Chapter 7 Bankruptcy.  Michigan Credit Card Debt Lawyer. Nearly 90% of the people who walk through my door are eligible to file a Chapter 7 Bankruptcy in Michigan and get a permanent discharge of their debt. With Chapter 13 Bankruptcy in Michigan, we can develop and affordable repayment plan to fit every budget.
 

 Contact me, Michigan bankruptcy attorney Walter Metzen to learn more about how I can help you get a Fresh Financial Start!.

Michigan Bankruptcy Laws/Means Testing  

 

Census Bureau, IRS Data and Administrative Expenses Multipliers

Most individual debtors filing for bankruptcy relief are required to complete either Official Bankruptcy Form 22A or 22C (Statement of Current Monthly Income and calculations). Bankruptcy Form 22A is the form chapter 7 debtors will complete for “means testing” purposes; Form 22C is the form chapter 13 debtors will complete. [The Official Bankruptcy Forms can be found on the Administrative Office of the U.S. Courts Web site.]

A debtor must enter income and expense information onto the appropriate form (i.e., Form 22A or Form 22C)and then make calculations using the information entered. Some of the information needed to complete these forms, such as a debtor's current monthly income, comes from the debtor's own personal records. However, other information needed to complete the forms comes from the Census Bureau and the Internal Revenue Service (IRS). This Web site reproduces the Census Bureau and IRS Data necessary to complete Bankruptcy Forms 22A and 22C. The source data reproduced here is also available directly from the IRS and Census Bureau using the links at the bottom of this page.

For questions related to this data, e-mail: ust.mt.help@usdoj.gov. For general assistance in filing for bankruptcy relief, the clerk of your local bankruptcy court or your local state Bar Association may have information regarding individuals or organizations offering bankruptcy related services, including on a reduced fee or pro bono basis. However, we and the clerk of your local bankruptcy court are prohibited from providing any legal advice.

Chapter 7: Means Test, Credit Counseling, and Debtor Education Information


Below you will find in-depth information from the U.S. government on "means test" eligibility, credit counseling, and debtor education requirements for Chapter 7 bankruptcy filers. These requirements came about as a result of changes in bankruptcy laws that took effect in October of 2005. This page will be updated as new information on bankruptcy filing requirements and procedures becomes available.

The "Means Test" and Eligibility for Chapter 7

Under the new bankruptcy law that went into effect in October of 2005, bankruptcy applicants who wish to file under Chapter 7 must meet certain eligibility requirements based on a "means test." Under the "means test," if your current monthly income is less than the median income in your state, you can file for bankruptcy under Chapter 7. The link below from the U.S. Trustee Program (a branch of the U.S. Department of Justice that is responsible for overseeing bankruptcy cases) provides more information on the "means test" -- including links to income figures and other information you will need in order to determine eligibility for Chapter 7.

Collection Financial Standards

Disclaimer: IRS Collection Financial Standards are intended for use in calculating repayment of delinquent taxes. These Standards are effective on March 1, 2008 for purposes of federal tax administration only. Expense information for use in bankruptcy calculations can be found on the website for the U. S. Trustee Program.

General

Collection Financial Standards are used to help determine a taxpayer's ability to pay a delinquent tax liability.  Allowable living expenses include those expenses that meet the necessary expense test.   The necessary expense test is defined as expenses that are necessary to provide for a taxpayer’s (and his or her family's) health and welfare and/or production of income.

National Standards for food, clothing and other items apply nationwide.   Taxpayers are allowed the total National Standards amount for their family size, without questioning the amount actually spent.

National Standards have also been established for minimum allowances for out-of-pocket health care expenses.  Taxpayers and their dependents are allowed the standard amount on a per person basis, without questioning the amount actually spent. 

Maximum allowances for housing and utilities and transportation, known as the Local Standards, vary by location.   In most cases, the taxpayer is allowed the amount actually spent, or the local standard, whichever is less.

Generally, the total number of persons allowed for necessary living expenses should be the same as those allowed as exemptions on the taxpayer’s most recent year income tax return.

If the IRS determines that the facts and circumstances of a taxpayer’s situation indicate that using the standards is inadequate to provide for basic living expenses, we may allow for actual expenses.  However, taxpayers must provide documentation that supports a determination that using national and local expense standards leaves them an inadequate means of providing for basic living expenses.

 

 
 

 


National Standards: Food, Clothing and Other Items

National Standards have been established for five necessary expenses: food, housekeeping supplies, apparel and services, personal care products and services, and miscellaneous.

The standards are derived from the Bureau of Labor Statistics (BLS) Consumer Expenditure Survey (CES).  The survey collects information from the Nation's households and families on their buying habits (expenditures), income and household characteristics.


National Standards: Out-of-Pocket Health Care Expenses

Out-of-Pocket Health Care standards have been established for out-of-pocket health care expenses including medical services, prescription drugs, and medical supplies (e.g. eyeglasses, contact lenses, etc.).  

The table for health care allowances is based on Medical Expenditure Panel Survey data and uses an average amount per person for taxpayers and their dependents under 65 and those individuals that are 65 and older.    

The out-of-pocket health care standard amount is allowed in addition to the amount taxpayers pay for health insurance.


Local Standards: Housing and Utilities

The housing and utilities standards are derived from Census and BLS data, and are provided by state down to the county level.  The standard for a particular county and family size includes both housing and utilities allowed for a taxpayer’s primary place of residence.

Housing and Utilities standards include mortgage or rent, property taxes, interest, insurance, maintenance, repairs, gas, electric, water, heating oil, garbage collection, telephone and cell phone.   The tables include five categories for one, two, three, four, and five or more persons in a household.

 


Local Standards: Transportation

The transportation standards for taxpayers with a vehicle consist of two parts:   nationwide figures for monthly loan or lease payments referred to as ownership costs, and additional amounts for monthly operating costs broken down by Census Region and Metropolitan Statistical Area (MSA).   A conversion chart has been provided with the standards that lists the states that comprise each Census Region, as well as the counties and cities included in each MSA.   The ownership cost portion of the transportation standard, although it applies nationwide, is still considered part of the Local Standards.

The ownership costs provide maximum allowances for the lease or purchase of up to two automobiles if allowed as a necessary expense.   A single taxpayer is normally allowed one automobile. 

The operating costs include maintenance, repairs, insurance, fuel, registrations, licenses, inspections, parking and tolls.

If a taxpayer has a car payment, the allowable ownership cost added to the allowable operating cost equals the allowable transportation expense.   If a taxpayer has a car, but no car payment, only the operating costs portion of the transportation standard is used to figure the allowable transportation expense.   In both of these cases, the taxpayer is allowed the amount actually spent, or the standard, whichever is less.

There is a single nationwide allowance for public transportation based on BLS expenditure data for mass transit fares for a train, bus, taxi, ferry, etc.  Taxpayers with no vehicle are allowed the standard, per household, without questioning the amount actually spent.

If a taxpayer owns a vehicle and uses public transportation, expenses may be allowed for both, provided they are needed for the health, and welfare of the taxpayer or family, or for the production of income.  However, the expenses allowed would be actual expenses incurred for ownership costs, operating costs and public transportation, or the standard amounts, whichever is less.

 

 


Recent Revisions

The Collection Financial Standards were revised on 10/01/2007 to:

  • Eliminate income ranges for National Standard Expenses
  • Eliminate separate tables for Alaska and Hawaii, creating one set of tables for National Standard Expenses
  • Create a new National Standards category for Health Care
  • Expand the number of household categories for Housing & Utility Expenses
  • Include an allowance for cell phone costs in the Housing & Utility Expenses
  • Create equal allowances for first and second vehicles under Transportation Expenses
  • Create a separate nationwide Public Transportation allowance
  • Metropolitan Statistical Areas (MSAs) for Milwaukee, Cincinnati, Kansas City and Tampa were not included in the BLS CES statistics used for 2007 transportation operating expenses. Taxpayers residing in the counties previously covered by these MSAs will now use the applicable regional numbers.

The Collection Financial Standards were revised March 1, 2008 and include the following change:

  • Metropolitan Statistical Areas (MSAs) for Pittsburgh, St. Louis, Anchorage, Denver, Honolulu and Portland were not included in the BLS CES statistics used for 2008 transportation operating expenses.  Taxpayers residing in the counties previously covered by these MSAs will now use the applicable regional numbers.
     

The revised standards are effective for financial analysis conducted on or after March 1, 2008.

 

 

 

 

 

 


Bankruptcy Basics - For Cases Filed on or after October 17, 2005 (pdf)
Bankruptcy Basics - For Cases Filed before October 17, 2005 (pdf)


   

Contact me, Detroit bankruptcy lawyer Walter Metzen today to schedule your free initial consultation. I also offer clients flexible appointment times and same day appointments if necessary. Get in touch with me today to learn how filing bankruptcy may be beneficial for you and your family. Why should you hire a Board Certified Bankruptcy Specialist? Click Here. My office has handled over 10,000 bankruptcy cases in Michigan and will apply this experience to your case as well. My office prides itself on fast, detailed, personal service. There are many different aspects to a bankruptcy case. Some of the different aspects are listed on the links below for you to explore. If you have any questions while exploring this site or would like a free personal bankruptcy consultation, contact my office at (313) 962-4656 or toll free 888-777-FILE.
 

 Contact me, bankruptcy attorney Walter Metzen to learn more about how I can help you get a Fresh Financial Start!.

 Be sure to Obtain a copy of your Credit Report after your Michigan Bankruptcy Filing and check it for Mistakes.

Contact me, bankruptcy attorney Walter Metzen to learn more about how the new Chapter 7 bankruptcy law may affect your case. I offer a free initial consultation so we can discuss your case personally.

We are a Debt Relief Agency helping people file for bankruptcy relief under the Bankruptcy Code. Let us help you decide if bankruptcy is right for you.

Bankruptcy attorney Walter Metzen represents clients throughout Southeast Michigan, including the communities of Detroit, Southfield, Warren, Roseville, Farmington Hills, Ann Arbor, Belleville, Canton, Clinton Township, Dearborn, Dearborn Heights, Hamtramck, Highland Park, Holland, Howell, Lincoln Park, Livonia, Macomb, Northville, Plymouth, Port Huron, Redford, Rochester, Saginaw, Southfield, Sterling Heights, Taylor, Trenton, Troy, Westland, Wyandotte, Ypsilanti, Mount Clemens, Howell, Oakland County, Macomb County, Wayne County, Washtenaw County, Livingston County, and all of the surrounding areas.

 


 

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