December 9, 2019

Means Test Musings

Over the past few weeks, I have received objections in two Chapter 7 cases from the U.S. Trustee having to do with the median income/means test Form 22A.

Under the new law, debtors must fit within these tests in order to qualify for Chapter 7. The first part of the test is called the “median income” test. Under this (simple) test, if your household income is below the average income for a similarly sized family in your State, then you qualify for Chapter 7. The average income figures are built into my bankruptcy preparation program, but if you want to see these figures, you can look at them on the U.S. Trustee’s web site.

If your income exceeds the average, you can still qualify for Chapter 7 if you pass the “means test.” This is where we compare your monthly income (generated from an averaging of your gross income over the past 6 months) to a pro-forma budget using IRS derived budget numbers.

If your real life expense numbers are higher than the means test numbers, you are most likely out of luck. The means test does contain a small window where a Bankruptcy Judge can find that a particular expense is “reasonable.” The problem, of course, is that the U.S. Trustee is taking a very conservative approach and most debtors do not have the money to pay for research and litigation.

Two issues have come up recently – be aware of these if you are a lawyer or a debtor planning to file:

1. Reasonableness of supporting a college aged child – the U.S. Trustee will object if you include food, housing and transportation expenses for a college aged child. According to the trustee, these expenses are not necessary.

2. Vehicle leases – the U.S. Trustee contends that leased vehicles are not secured debts therefore the lease cost may not be an allowable expense in the pro forma budget. It seems to me that both leases and purchases are “ownership costs” such that it would be absurd to disallow lease payments, but it appears that is exactly what the trustee is doing.

I have a meeting scheduled for later this week to discuss these issues with an attorney in the trustee’s office – perhaps I will get some clarification.

About Jonathan

Jonathan Ginsberg represents honest, hardworking men and women in the Atlanta area who need personal bankruptcy protection. In practice for over 25 years, Jonathan teaches bankruptcy law and practice at legal continuing education seminars and he is a founding member of the Bankruptcy Law Network. Jonathan lives with his wife and children in Atlanta.


  1. Did you get an answer to the lease vehicle issue? I have a similar issue: The US Trustee has objected on the basis that since the Debtor does not have a car payment, he cannot take the deduction for the national vehicle ownership allowance. This does not seem equitible since if he had a $1 secured payment, he could take the balance of the allowance. The Best Case program automatically inputs the “ownership allowance” if a vehicle is entered in the “operation allowance” (Plus, if he didn’t have any vehicle, the operation allowance would be higher!) Any ideas?
    Thanks, Dorothy

  2. Dorothy: I met with one of the U.S. Trustee’s trial attorneys and went over both my form B22A and the “B22A Statement Comparative Analysis” that the Trustee’s office prepared.
    The trustee’s position is that vehicle leases are not secured debts – they should therefore appear on Schedule F as an unsecured debt. As such there should not be a secured debt payment for the lease at line 42.
    Instead, if you look at lines 22, 23, and 24, there are allocations for operating costs (line 22) and ownership costs (lines 23 and 24). That is, apparently, where the lease payments need to go. I am looking at the trustee prepared comparative analysis and it has both ownership and operating costs in the column prepared by the trustee, so I don’t see how the trustee’s office can refuse to permit both operation and ownership as they are obviously two different expense categories.
    The problem that I had was that the permitted ownership cost allocation was less than the actual lease payment, leaving “disposable” income. In my case, I ended up converting to a 13.

    Also, don’t forget that if you are preparing a Chapter 13, you need to put in a step provision to increase the payment as of the date that the lease ends.

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