Debtor Loses Argument that “Current Monthly Income” for the Means Test Includes Gross Income Received 60 Days Before Filing Date

Debtor Loses Argument that “Current Monthly Income” for the Means Test Includes Gross Income Received 60 Days Before Filing Date

Debtor is single with no dependents and is employed at Kay Jewelers, where he has worked for four years earning an hourly wage plus commissions. He filed his Chapter 7 petition on March 31, 2017. Debtor’s petition states that his debts are primarily consumer debts. His amended bankruptcy Schedule I shows gross monthly income of $3,924.52 and total monthly income after payroll deductions in the amount of $2,578.52. Debtor’s amended Schedule J shows total monthly expenses in the amount of $3,043.05, with a resulting budget deficit of $464.53.

As required under the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (“BAPCPA”), Debtor also completed and filed an Official Form 122A, Statement of Current Monthly Income and Means Test Calculation. [UST Ex. 4]. On Form 122A, he reports total current monthly income in the amount of $3,924.52.  On an annualized basis, Debtor’s current monthly income as reported on Form 122A-1 is $47,094.24, which is above the median family income for a family of one in Ohio. [Doc. # 17-4, p. 2]. Part 2 of Debtor’s means test calculation includes deductions for expenses totaling $3,923.43. Part 3 thus shows Debtor’s monthly disposable income on line 39c as $1.09 ($3,924.52 minus $3,923.43), and he indicates that a presumption of abuse does not arise under § 707(b)(2).

The UST disagrees and argues that Debtor’s means test contains several errors. Specifically, the UST contends that Debtor’s current monthly income is understated due to a miscalculation of Debtor’s income. The UST calculates Debtor’s current monthly income to be $4,263.96 based on his gross pay for pay periods ending on August 27, 2016, through February 11, 2017, which constitutes the gross pay received by Debtor in the months of September 2016 through February 2017. In addition, bankruptcy analyst Timothy Dugic testified that Debtor is entitled to expense deductions in the total amount of $74.68 that are not otherwise shown on his amended Form 122A and that include an additional $7.84 tax deduction on line 16, a life insurance deduction of $3.04 on line 18, a telephone and telephone services deduction of $40.00 on line 23, an additional $1.00 mortgage deduction on line 33a, and a deduction for a monthly administrative expense if he was filing under Chapter 13 in the amount of $22.80. According to the UST, if properly calculated with these modifications, the means test shows that there is a presumption of abuse.


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