A filing debtor recently blogging on a bankruptcy forum website asked the following question: “Form 22A Part II line 8 asks for “Any amounts paid by another person or entity, on a regular basis, for the household expenses of the debtor or the debtor’s dependents.” Are we required to list our 15 year old child’s modest income on this line?”
Basically, what the debtor is asking is should my child’s income be included in the means test? The means test is a tool included in bankruptcy law to determine whether or not a debtor can file a Chapter 7 bankruptcy. If you pass the means test, you are eligible to file a Chapter 7, but if you are over the median income for a family the same size within the area in which you live or you fail the means test, you have to file a Chapter 13 bankruptcy if you you want to file.
In this particular illustration, the blogger informs the forum thread that her child’s income was from working for her brother’s company part time, and the son made $1800. There was no indication this was something other than a part time job during the summer.
If the money were kept separately from household funds and not used for household expenses, it is not likely the money needs to be reported as household income. Honesty is the best policy when filing for bankruptcy status, though. The amount should be discussed with your bankruptcy attorney who would know the local bankruptcy district procedures in dealing with such matters.
All income that contributes to household income should be included in the means test, temporary employment or not. Here are some suggestions at things you might want to look at to determine if a child’s income should be included in the means test?
Does the income contribute in any way to household expenses?
What will be the ultimate use of the child’s money? If it is for a college education, the money may be possibly exempt from consideration if it solely comes as a result of the child’s work. Some college fund payments made by the filing adult, on the other hand, may have to be included in the means test as income instead of expenses.
Has the money been co-mingled in any way with the parent’s money? For example, are both the child and the parent making payments on a vehicle for the child? Or, has the money been placed in a mutual savings account?
Is the income made by the child related to a family allowance plan? If so, the money has already been figured in your income for means test purposes.
Just from the short list, there are a lot of variables in determining what should be included and should not be included for means test consideration. Again, an experienced bankruptcy lawyer familiar with the local bankruptcy district rules and procedures would be the best place to seek out whether a child’s income should or should not be included in the means test.
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