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The means test incorporates certain deductions such as mortgage expense, secured debt, food, utilities, and other expenses similar to that which are calculated based upon the IRS national standards and local standards. For instance, the mortgage expense would in New Jersey is based on a standard of living in the state but also actually varies depending on the county in which you reside. Other expenses that would be applicable include alimony and child support payments, unreimbursed medical expenses, child education and other expenses that a household has to pay. They are all part of the that are embedded in the bankruptcy software, which are utilized to reach a conclusion whether an individual or joint debtors’ family is an above or below median income case.

How Are My Family Support Obligations Valued By The Means Test?

Family support is generally considered what costs are necessary to run the household. It could also be some type of alimony or other support obligation for an individual outside the household. The amounts that an individual debtor or a household actually spends is disclosed on Schedule “I “and “J” of a Bankruptcy Petition, I being the income schedule and J being the expense schedule of the petition. Essentially, the means test is a template of the allowable other expenses as permitted under IRS and local standards. Family support obligations are included in the means test if they are for dependents residing outside the household.

What Is The Marital Deduction Adjustment?

The marital deduction adjustment is an element of the means test formula that is used in the calculation to determine whether individuals are below median income and qualify for Chapter 7 or above median income and have to resort to a Chapter 13. The marital adjustment is actually one of the more controversial aspects of the means test. Claiming this deduction is important, if a non-filing spouse has significant income which might otherwise disqualify an individual from filing Chapter 7 because the income of the non-filing spouse is included under the means test.

The means test includes the regular monthly household expenses, such as a mortgage payment, utilities, groceries, and food. These are not part of the marital deduction. There is another aspect of the means test that is the expenses a non-filing spouse uses to pay for personal expenses that are actually separate from the household expenses. Those are expenses that are not actually being used to pay the family budget expenses listed on schedule J.

What Are Examples Of Some Expenses Of A Non-Filing Spouse Used In Marital Adjustment?

Expenses of a non-filing spouse would include payments on credit cards that are solely in the name of the non-filing spouse, car payments, insurance, student loan payments, alimony, and support payments the non-filing spouse pays for children who do not live in the household. Any mortgage payment or expenses for real estate that is owned solely by the non-filing spouse would be included in the marital adjustment that may otherwise reach a conclusion that someone qualifies to file Chapter 7, even though a non-filing spouse’s income is significant.

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