What is the Means Test "Look-back" Period

Any consumer bankruptcy filed in Western Pennsylvania will require the filer to complete and submit a "means test" on Form 22A-1 of the bankruptcy petition.

The means test helps determine if the debtor has enough money to repay his or her creditors, and if so, how much. Unfortunately, the means test is quite simplistic. This often leads to inappropriate results that show a filer as having income to repay creditors that does not exist. Your previous 6 months of earnings may not represent your future employment circumstances.

The means test income review has blind look-back period of 6 months. By "blind", I mean it looks back 6 months without any other context and includes any money earned during that period, whether or not the debtor is still making that money, or will continue to make that money. For instance, a one-time bonus or sales commission from 3 months ago will count towards the debtor's income calculation, showing an inflated income that does not exist.

How is the look-back period calculated? Form 22A-1 must include all income earned by the debtor for the 6 months preceding the bankruptcy filing. So, let's assume your bankruptcy is filed on July 15th, 2015. The first month preceding July is obviously June. You then count backwards from June... May, April, March, February, and January.

Therefore, a bankruptcy filed on July 15th, 2016 will consider all income earned from January 1st 2016 through the end of June 2016. This will be your means test "look-back" period. Income earned from July 1st to July 15th (in this example) will not be considered.

Obviously, planning your bankruptcy filing with this look-back period in mind is extremely important. As an experienced Pittsburgh bankruptcy attorney, I can help you consider these means test issues so you can most efficiently file your bankruptcy. It may be beneficial to wait to file. I'll advise patience when it bests suits you.

Conversely, if your income is expected to rise, filing bankruptcy as soon as possible may be advisable. We'll be ready to go if that is the case.

Contact us to set up a free consultation. And have your paystubs ready!