When you file for Chapter 7 bankruptcy, you must fill out a series of forms referred to as the “means test” (Forms 122A-1, 122A-1Supp, and 122A-2). One of the important calculations on the means test is your “current monthly income.” This figure plays a large role in whether you qualify for Chapter 7 bankruptcy, or not. (To learn more about the means test, see The Means Test & Other Chapter 7 Eligibility Issues.)
Here’s a primer on what is included in current monthly income and how to calculate it for the bankruptcy means test form.
For purposes of the means test, you current monthly income (CMI) is the average monthly income you received from all sources that was derived during the six-month period that ends on the last day of the month preceding your filing date.
Here are some more details:
The look back period. The CMI definition can be confusing since it looks at your income in the previous six-months (often referred to as the “look back” period), not, as the term would suggest, the amount of money that you currently earn.
“Derived.” The word “derived” in this definition might be important if you received money during the six-month period that was derived (or earned) during a different period.
Includes regular payments from another for household expenses. This amount also includes any payments you receive on a regular basis for your or your dependents’ household expenses. For example, if your children’s father gives you $500 per month to pay for your kids’ food and clothing, you must include this in your CMI.
In joint cases, include both spouses’ income. If you are filing a joint case, CMI includes income for both spouses.
You must include all of your income, whether it is taxed or not, except the following:
Here are some examples of income that should be included (this list is not exhaustive):
To get your current monthly income (CMI), add up the total income you received from all sources during the six-month look back period, and then divide by six to come up with your average monthly income.
If you are employed and get a regular paycheck in the same amount each pay period, it will probably be easy to calculate your CMI.
But calculating your CMI isn’t always straightforward. Here are some examples.
Courts employ various interpretations of what is included in the definition of CMI. If your income situation is less than regular, it may be advantageous to consult with a local bankruptcy attorney who knows the views of your local bankruptcy trustee and court. A good bankruptcy attorney may also be able to advocate for an interpretation of CMI that is advantageous to your situation.