Question 1

If the client did not pass the Means Test, and you proceed with completing Form 122A-2, taxes and insurance are included in the mortgage calculations.

Accepted Answer

In Form 122A-2, which is part of the Chapter 7 Means Test calculation, monthly mortgage payments are calculated including taxes and insurance, as these are considered necessary expenses for maintaining the payment on the debtor's home.

Question 2

Future payments for Form 122A-2 are maxed out at&#10;A) 36 months.&#10;B) 60 months.&#10;C) Time left on the mortgage.&#10;D) None of the above.

Accepted Answer

Form 122A-2, which is part of the Chapter 7 means test calculation, uses a 60-month period to calculate future payments when determining a debtor's monthly disposable income. This is because the form is designed to project the debtor's financial situation over the next five years, which equates to 60 months.

Question 3

If the client failed the Means Test initially, are escrowed mortgage payments listed together or separate?&#10;A) Together.&#10;B) Separate.&#10;C) It doesn't matter as it will not affect the outcome.&#10;D) Mortgages aren't considered for purposes of the Means Test.

Accepted Answer

Escrowed mortgage payments are listed separately in the Means Test to accurately reflect the debtor's monthly expenses and obligations.

Question 4

If the debtor's income is below the state median, the debtor has passed the Means Test, and completing Form 122A-2 isn't required.

Accepted Answer

The Means Test, specifically Form 122A-1, determines if a debtor's income is below the state median for their household size. If it is, they are not required to complete Form 122A-2, which is used for further analysis for those above the median income.

Question 5

Can a debtor claim IRS allowable expenses even if those expenses exceed the debtor's actual expense?

Accepted Answer

Debtors can claim IRS allowable expenses even if their actual expenses are lower, as these are standardized amounts set by the IRS for calculating repayment ability in bankruptcy cases.

Question 6

Once a debtor passes the Means Test, Schedule I calculations are irrelevant.

Accepted Answer

The Means Test determines eligibility for Chapter 7 bankruptcy, but Schedule I, which outlines the debtor's income, is still relevant for determining the monthly payment plan in Chapter 13 bankruptcy or for other considerations in the bankruptcy process.

Question 7

When and why does Form 122A-2 have to be completed?

Accepted Answer

The answer of When and why does Form 122A-2 have...

Deck 18: Means Testing Official Form 122A-2