Now that we have met each other and you have delivered your documents to me, I will analyze your financial circumstances and prepare your Statement of Current Monthly Income. A Statement of Current Monthly Income is an assessment used to determine your disposable income which is used to fund your Chapter 13 Bankruptcy Plan.
The Statement of Current Monthly Income primarily encompasses a two-step analysis:
STEP ONE: Your (the “debtor’s”) gross income is calculated on an average over a six month period prior to filing for Bankruptcy. Gross income for these purposes includes wages, salary, tips, bonuses, overtime and commissions. It does not include social security benefits. The figure derived from taking the average is than considered the Debtor’s Current Monthly Income which is then compared to the median income for your state and household size. If your current monthly income is less than the median income for your state and household size, than you are allowed to file a Chapter 7 Bankruptcy Petition. If, however, your current monthly income is greater than the median income for your state and household size, you may proceed to Step Two and file a Chapter 13 Bankruptcy Petition. The amount of money that is above the median income is considered your disposable income.
STEP TWO: The second step of the Statement Of Current Monthly Income allows you to subtract from your current monthly disposable income certain allowable and deductible expenses.3 These allowed deductions include, but are not limited to, expenses for living (mortgages and property taxes), transportation (car loans and car taxes), health insurance and charitable donations. After the calculations are performed, and the allowable deductions are taken, the amount remaining is considered the amount of your disposable income which will be used to fund your Chapter 13 Bankruptcy Plan. An explanation of how I formulate your Chapter 13 Bankruptcy Plan will be the topic of an upcoming blog in this Chapter 13 Series.
The discussion above is an overview of the Statement of Current Monthly Income in basic terms and is in no way intended as a specific analysis of your personal financial circumstances.
For an analysis of your own financial circumstances, please contact Attorney Theresa DeGray at 203-713-8877 to schedule your free consultation today!
1See: 11 U.S.C. § 13013(b)
2See: 11 U.S.C. § 13013(b)(2) and 11 U.S.C. § 13013(b)(3)
3See: 11 U.S.C. § 13013(b)(2)(A)