Bankruptcy Means Test Figures Changing March 15, 2011

The Bankruptcy Means Test figures are changing again on March 14, 2011 and I am once again reminded of how absurd the means test is. When the US Trustee posts new means test figures, I alway take a careful look at the numbers and compare them to determine how it will affect my clients. Increases in deductions or changes in median income can make be the difference between passing or failing the test.

http://www.justice.gov/ust/eo/bapcpa/20110315/meanstesting.htm
 
 
I don’t understand how anyone is expected to live on these made up figures.  They don’t reflect reality or adjust for what a family really spends.  The distance someone has to drive to work has no bearing on the case, nor the cost of their actual car or home maintenance.  There was no increase in the operating costs for automobiles,  despite the fact that the price of gas is rising.

Just to show you how absurd it is the allowance for housekeeping supplies for two people is a dollar more than for three people.  Does the government think that three people need less cleaning products or use less toilet paper than two?  The person  setting this obiviously doesn't have a 5 yr old!

 As people are loosing their jobs and the median income drops, more will be required to take the means test which could say that Chapter 7 bankruptcy is presumed to be an abuse of process.  The bankruptcy Means Test will apply to, and potentially hurt, more people as unemployment rises and salaries drop.
 
If the median income figures for a state drops, it lowers the bar for debtors who will be subjected to the means test and the possibility of being denied help in Chapter 7 bankruptcy.

If debtors fail the means test, they often have to file a Chapter 13 repayment plan if they want to file bankruptcy. If a debtor is above median income, that Chapter 13 repayment plan will last for five years. Unfortunately, even though the means test says there is money available to make the Chapter 13 plan payments, real income and expense comparisons show that there is less or even no funds left once regular living expenses are paid.

Families who might not have had to take the means test prior to November 1st, 2009  may now subject to take, and maybe fail the test. My experience with the means test has been that it is most unfair to people just above median income since many necessary, common, reasonable and/or actual expenses are not allowed as deductions on the means test.


In Florida  the new figures are as follows:

one household member   $40,029
two                                $50,130
three                               $54,595
four                                $65,135

add $7,500 for each member in excess of four


National out of pocket healthcare costs per person
under 65  $60
over 65 $144
ARE THEY FRICKING KIDDING ME!

Administrative Expenses Multipliers


11 U.S.C. § 707(b)(2)(A)(ii)(III) allows a debtor who is eligible for chapter 13 to include in his/her calculation of monthly expenses the actual administrative expenses of administering a chapter 13 plan in the judicial district where the debtor resides.  The chapter 13 multiplier (for the State of Florida) needed to complete Official Bankruptcy Forms 22A and 22C (Statement of Current Monthly Income and calculations) is set forth below. Form 22A is the form most chapter 7 debtors will complete and the multiplier is
entered on Line 45.b; Form 22C is the form most chapter 13 debtors will complete and the
multiplier is entered on Line 50.b.

Florida

FLM Middle District of Florida 7.4%

FLN Northern District of Florida 10.0%

FLS Southern District of Florida 9.8%
 
 
Collection Financial Standards for Food, Clothing and Other Items


Expense               One Person             Two Persons               Three Persons                    Four Persons

Food                     $300                       $537                           $639                                   $757

Housekeeping supplies $29                   $66                              $65                                    $74

Apparel & services       $86           $162                            $209                                  $244

Personal care products & services
                                    $32                   $55                              $61                                      $67

Miscellaneous               $87                   $165                            $197                                    $235

Total                             $534                 $985                            $1,171                                 $1,377

More than four persons Additional Amount Per Person
For each additional person, add to four-person total allowance: $262
Bankruptcy Allowable Living Expenses – National Standards (See 11 U.S.C. § 707(b)(2)(A)(ii)(I))
 
Housing CostsA family of  2 in Pinellas w/ a mortgage or rent = $874 housing
A  family of 4 $1026     
                                     
Hillsborough                              $967          family 4    $1136

Pasco                                      $746                            $875



Operating Costs for Car
one car $244 two cars $488


Ownership Costs for Car
one $496
two $992


http://www.justice.gov/ust/eo/bapcpa/20110315/bci_data/median_income_table.htm