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Top 10 Most Common Means Test Errors

July 14, 2015 by Shannon Doyle

shutterstock_162900905-750x420Bankruptcy law is a volume, detail oriented practice. Success comes in being able to manage a high volume with efficiency. When preparing or reviewing a chapter 7 or chapter 13 petition for filing, bankruptcy attorneys should always strive to avoid post-petition amendments, continuances, delays or possible humiliation in front of their client at a 341(a) meeting. Having to scramble for documents right before a hearing only to find out the information in the petition is not accurate, or having to go back to the office to prepare an amendment after the trustee has publically advertised your mistake at the 341(a) meeting is not only embarrassing but inefficient.   Inefficiency costs money, wastes time, reduces quality and can damage the reputation of your practice.  This is not by any means an exhaustive list but here are the ten most common errors found on the Means Test that can lead to inefficiencies, or worse legal issues for your client:

  • The income does not match schedule I and there is no explanation attached.
  • The net income for a business is listed instead of gross.
  • In some jurisdictions: Taking the IRS standard deduction for a vehicle instead of the actual vehicle amount over sixty months (This is required in Central District California, Riverside Division).
  • Listing the average taxes over the six month period prior to filing instead of the current tax deduction when debtors have changed their tax deductions moving forward. This applies to other deductions like retirement and life insurance.
  • Childcare is not listed in the Means Test but is listed on Scheduled J or vice versa.
  • Telecommunications expenses are inflated and unsupported by evidence.
  • Proof of charitable contributions are not provided to the trustee.
  • Proof of money spent on the care of a disabled or elderly family member is not provide to the trustee.
  • Business expenses are not reviewed to see if the debtor is double dipping on utilities, transportation, insurance, etc.
  • “Special Circumstances” are listed without providing documentation including a declaration of the debtor.

Whether you, the bankruptcy attorney, are preparing your own petitions or you have someone else preparing petitions for you, make sure you have all the necessary documentation and that the information presented in the petition is accurate. This is especially important if the debtor claims to have extraordinary expenses. It may consume more time up front but back tracking later will create a much greater time and expense deficient.


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