All individuals have to take a means test before filing a bankruptcy, and if their income, depending on the number of individuals in the family, exceeds a certain amount, the presumption is they cannot file a chapter 7. However, there are multiple deductions that can be taken from the gross income to show that the individual qualifies for a chapter 7, rather than doing a chapter 13.
WHAT ARE SOME OF THOSE MOST COMMON DEDUCTIONS?
The most common deductions are secured debts, like mortgage arrears, real estate taxes, car loans, child support, child care, income taxes, health insurance, and life insurance. Also, any medical expenses that are not covered by insurance, such as medicinal marijuana, are deductible.
ADDITIONAL INFORMATION ON THE MEANS TEST IN ILLINOIS
Always disclose the actual number of people living in your household. It helps to defeat the means test. Sometimes, you can rebut a presumption. For instance, people who were getting large amounts of overtime, and the employer has stopped the overtime. Without the overtime, they will be under the income requirement. There are methods to rebutting the presumption that a case should be filed as a chapter 13, as opposed to a chapter 7.
DEPENDENTS
The first step is to determine your annual gross income and the number of dependents you have.
Clients know to include minor children living at home. But, they forget dependents include others: children away at college; grandchild, nieces, nephews, stepchildren, foster children, and significant other’s children. They merely have to be living with you and dependent on you.
DETAILS ON “HOW TO BEAT THE MEANS TEST”
A fuller explanation and details can be found at the following:
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