Increasing Bankruptcy Expense Limits Under the Means Test

by | Mar 13, 2023 | Bankruptcy Law, Chapter 13, Personal Bankruptcy |

The Bankruptcy Code was amended in 2005. One of the significant changes was to add an income test with the idea being high income earners should be in chapter 13 rather than chapter 7. Under this “means” test your income is compared to other similarly situated individuals. For example, If you are a family of four residing in Cherry Hill, Camden County, New Jersey your income and expenses are compared to the average income and expenses of a family of four in Camden County New jersey.  If you exceed that income there are limits on your expenses. For example, in Camden County housing and utilities expenses for a family of 4 is generally limited to $866.00 per month. That amount is automatically included regardless of what your actual expenses are. However, if your home energy expenses are higher than typical, and you can provide documentation to support the higher number, the court can allow the higher, actual expense. There are other expenses that can also be changed. For example, food and clothing allowed expenses can be increased by a maximum of 5%. Keep in mind that all expenses are only allowed if reasonable and necessary so if your food bill is high because you go out to dinner alot, that won’t be allowed. If it is for a reasonable and necessary expense such as food allergies, there is much better chance of getting accepted. Even if your income and expenses, with this add-on, still results in the need to file a chapter 13 and pay something to your creditors, your payments will be less than they would have been.


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