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How to determine “Current Monthly Income”

Anyone filing bankruptcy must determine what their current monthly income is. The information is used for the means test to determine eligibility of filing for one of the chapters as well as to calculate what must be paid in a chapter 13 plan. Form 22c must be attached to the petition for bankruptcy and there debtors must state their current income.
Current monthly income is defined as the average monthly income from all sources the debtor receives. It doesn’t matter that the income is or isn’t taxable. It is the average income that is derived during the 6 month period ending on the last day of the calendar month just before filing the petition or as determined by the Court. Any amounts paid from any sources on a regular basis for the household expenses are included except benefits under social security, payments to victims of crimes and payments to victims of terrorism.

Pay advices are usually filed with the petition as evidence of income, but are not the only source of proof. Bank statements, dividend statements, CD’s or other financial documentation can be examined and act as proof of income. The Court may order additional documentation to be filed and tax returns are normally given to the trustee at least 7 days before the 1st hearing in the case. In chapter 7, two years past returns are submitted, in chapter 13, three years returns are given. If the case is filed at the beginning or near the new year, trustee’s will require the debtor to produce the most recent return, therefore debtors should prepare and file their returns as soon as possible. In a chapter 13, returns are submitted each year as proof of current income.

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