Unemployment Compensation is Factored into the Bankruptcy Means Test

If you are receiving unemployment, it is considered in a bankruptcy means test.

For those considering filing for personal bankruptcy, and receiving unemployment, you must provide this information to your Iowa bankruptcy lawyer. This includes all pay stubs from the past year and anything that demonstrates ownership and the value of property you own. This information is used to fill out bankruptcy forms, and that includes Form B22A, referred to as the means test. Overall, the Iowa bankruptcy lawyer uses your income, plus unemployment, to perform a means test.

If your income is just above the state median income parameters, you will be told whether you are eligible to file for Chapter 7 bankruptcy, after the means test results are determined. Your means test must include records of any and all income within the past six months, aside from your regular job. The means test process starts by figuring out your current monthly income and what income types are present.

For instance, there are a wide variety of income types that may include:

    Salary
    Tips
    Wages
    Bonuses
    Commissions
    Overtime
    Real property income
    Retirement income
    Business income
    Unemployment
    Contributions to the household income

Social security benefits are not included in the means test. What happens next is the Iowa bankruptcy lawyer adds up all of your income and divides by six, representing the six months prior to filing for bankruptcy. This provides the lawyer with your current monthly income, which is then multiplied by 12 to show your yearly income. This is compared to the median family income across the state. If the figure is above the state median, the lawyer figures out your disposable income, arrived at by deducting allowable expenses from your monthly income.

The final step is to determine if the presumption of abuse may rear its head should you file for Chapter 7. In short, if your monthly disposable income is under $6,000, there is no presumption of abuse. If it is more than $10,000, abuse is presumed and you would not be eligible to file for Chapter 7 bankruptcy protection.

Each state is different when it comes to the means test, but in general, your income is figured out along those lines, no matter where you live. Always discuss your situation with a skilled bankruptcy lawyer, and avoid the very real possibility that should you attempt to file on your own, you may run afoul of the hundreds of rules and regulations governing bankruptcy.

Kevin Ahrenholz is an Iowa bankruptcy lawyer and Iowa bankruptcy attorney. To contact him, visit http://www.iowachapter7.com or call 1.877.888.1766.

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