Debtors who earn more than the median income for their state will need to take the means test to determine their eligibility for Chapter 7 bankruptcy . Below are some important deductions above-median income debtors may want to consider when thinking about bankruptcy.
- Debtors considering bankruptcy should think about whether or not their taxes can be discharged in the bankruptcy process. If your taxes are not eligible for discharge and you’re on an installment plan when you file for bankruptcy, you may be able to deduct those tax payments from your income when taking the means test
- Do you work at a job which requires you to pay union dues or buy a uniform? When taking the bankruptcy means test you may be able to deduct those expenses from your income.
- If you have a child in day care or private school because they are physically or mentally disabled, you may be able to deduct that expense from your income on the bankruptcy means test.
- Health insurance, disability insurance, health savings accounts and other health related expenses can be deducted from your income on the bankruptcy means test.
- If you live in an area which has high energy costs more expensive than the national average, you may be able to deduct those costs from your income on the bankruptcy means test.
- Even charitable donations within a prescribed limit can be deducted from your income on the bankruptcy means test.
But it isn’t enough for a bankruptcy debtor to simply declare that they have these expenses listed above, they also need to provide receipts or other proof that the expenses were in fact paid.