Current Monthly Income (CMI) vs. Means Test

The Current Monthly Income (for a Chapter 13) or the Means Test (for a Chapter 7) must be filed out and filed in all Consumer Bankruptcies. In a Chapter 13 it is a test to determine how much will be paid back to the unsecured creditors and in a Chapter 7 it is a test to determine if a Debtor qualifies to file a Chapter 7. They are almost the same form, with a few differences.

The main difference between the two tests is in a Chapter 13 a Debtor is allowed to use any money being paid into a retirement account, including any loans that are being repaid. In a Chapter 7, a Debtor is not allowed to use money being paid to a retirement account as a deduction to determine if they will be able to file a Chapter 7.

Sometimes this difference leads to a impractical result, causing a Debtor to file a Chapter 13 because they don’t qualify for a Chapter 7, but leaving them with nobody to pay in a Chapter 13 because once the money being paid into a retirement account is taken into consideration they are not required to pay anything back to their unsecured Creditors. However, the court has ruled that just because a Debtor would be in a plan paying nobody is a not a reason to overcome the presumption of abuse in a Chapter 7.

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