Chapter 7 Trustee Todd Frealy’s job as a bankruptcy trustee is to review the means test in chapter 7. This is known as Form 22A or the CHAPTER 7 STATEMENT OF CURRENT MONTHLY INCOME AND MEANS-TEST CALCULATION. This form is the one that shows whether there has been a presupmtion of abuse in the debtor filing in the wrong chapter.
Today we talk about line 42 of the Form 22A or the Means Test. Line 42 provides:
“Future payments on secured claims. For each of your debts that is secured by an interest in property that you own, list the name of the creditor, identify the property securing the debt, state the Average Monthly Payment, and check whether the payment includes taxes or insurance. The Average Monthly Payment is the total of all amounts scheduled as contractually due to each Secured Creditor in the 60 months following the filing of the bankruptcy case, divided by 60. If necessary, list additional entries on a separate page. Enter the total of the Average Monthly Payments on Line 42.”
This is the line where secured payments on houses and cars are placed. In a house payment, the payment will probably extend longer than 60 months and therefore the average monthly payment will be the same amount that they client makes every month.
In a car payment, the average monthly payment may be LESS than the amount he pays each month. This number can make a difference if the client is close to not qualifying under a Chapter 7.
On line #42 of the means test, be sure to figure in the amount of time left on the obligation. If the amount is LESS than 60 months, then the payment placed in line #42 will be less than the monthly payment he ACTUALLY makes. Do not get tripped up by this potential trap.