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Why do I have to give paystubs to my bankruptcy attorney?

Posted on Oct 11, 2009 in Bankruptcy, Bankruptcy procedures, BAPCPA

At Lakelaw, we ask all our clients to give us paystubs from their jobs for the six months prior to the date that they are filing their bankruptcy case.  It’s a pain in the neck.  We know.  Why do we ask?  Congress requires us to ask.

Under the “means test” you are considered to be abusing the bankruptcy system by filing a chapter 7 case – a straight bankruptcy – if your “current monthly income” is more than the national median.  What does that mean in plain English?

If you make more than 1/2 of the people in the country for a family your size, Congress thinks you should be filing a chapter 13 case, all things considered.

Just to be sure you are not noodling your numbers, Congress figures out what you are making now by averaging what you made over the past six months.  So even though the past six months does not reflect your present income, it does define your “current monthly income” for means test purposes.

If you make more than the median income for a family our size, we can sometimes qualify you for chapter 7 if you “overcome the presumptions” of abuse.  For this, we need to do a detailed means test analysis.  We charge you extra for this.  It takes us an hour or two to analyze your situation and decide the proper outcome for you.  We’ll explain more about this in a future post.

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