Paycheck Deductions

[chad9162]

Okay, I understand that we use the last 6 months for income purposes but when it comes to payroll deductions, like mandatory retirement, union dues, etc do we use current numbers or the average of the last 6 months?

[lrprn]

Okay, I understand that we use the last 6 months for income purposes but when it comes to payroll deductions, like mandatory retirement, union dues, etc do we use current numbers or the average of the last 6 months?

You use the average of the last six full calendar months for everything related to income and expenses on the bk forms, including payroll deductions, retirement, dues, etc.

[arami008]

lrprn:

In the means test calculations for monthly income you use the CURRENT income not the 6 month average...according to the nolo 2008 book it says that this result can be different than the average income that schedule I requires, right?

[Nextgen]

Do deductions even matter, since it takes gross wages?

Or under taxes "incurred" do you get to use the taxes taken out of your check rather than tax return?

[DebtStinks]

All figures must reflect average monthly income received from all sources, derived during the six calendar months prior to filing the bankruptcy case, ending on the last day of the month before the filing. If the amount of monthly income varied during the six months, you must divide the six-month total by six, and enter the result on the appropriate line.

That is straight off the Form B22A for CA Eastern.

[chad9162]

Thanks for all the post I think I'm going to just use the average of the last 6 months.

[kenshirley]

It's the gross income only for the purpose of the means test and filing.
The deductions do not come into play until after that.

[chad9162]

It's the gross income only for the purpose of the means test and filing.
The deductions do not come into play until after that.

Not following you there. If you're over the median income then Deductions or Expenses are part of the means tests and used to determine disposable income, which determines Chapter 7 or 13.

Someone also stated that you use "current" income for the means test....I think that's wrong. Like others have said it the average of the prior 6 months before filing. I think someone also misquoted Nolo....

From Nolo and Means test calculator

Although Chapters 7, 11, and 13 use CMI for different purposes, the basic computation is the same in each. The definition includes in this average (1) income from all sources, whether or not taxable, and (2) any amount paid by an entity other than the debtor (or the debtor’s spouse in a joint case) on a regular basis for the household expenses of the debtor, the debtor’s dependents, and (in a joint case) the debtor’s spouse if not otherwise a dependent. At the same time, the definition excludes from the averaged income “benefits received under the Social Security Act” and certain payments to victims of terrorism, war crimes, and crimes against humanity.


Also, this Means Test calculator is pretty good....

http://www.legalconsumer.com/bankruptcy/nolo/

[lrprn]

lrprn: In the means test calculations for monthly income you use the CURRENT income not the 6 month average...according to the nolo 2008 book it says that this result can be different than the average income that schedule I requires, right?

Sorry, arami, I think you may have misinterpreted or misread what the Nolo book says.

Your annual gross income for the Means Test is the total income from all sources over the last six calendar months before filing divided by 6, then multiplied by 12. As goofy as it seems, this is how the current bk law was written. Your monthly average income is then calculated by dividing the annual gross income from the last calculation and dividing that figure by 12.

I'm curious....what do you see as the difference between 'current' and 'six-month average'?