Are there exceptions to the chapter 7 income test if person has too much qualify now but believes they will not be able complete a 13 due impending heart surgery?
1) The projected disposable income (“PDI”) test. PDI is the amount of money left over after deducting certain household expenses from one’s gross household income. If a debtor’s PDI is below the state median, they are presumed to be eligible for chapter 7.
2) The current monthly income (“CMI”) test. CMI is more specific than PDI. Unlike PDI, CMI takes into account specific, individualized living expenses instead of using the standardized deductions set out by the IRS guidelines.
3) The unusual circumstances test. This exception allows a debtor to file for Chapter 7 even if they exceed the means test threshold if they can prove that they have “unusual circumstances.” Examples of unusual circumstances include unexpected medical expenses, loss of employment, or significant fluctuations in income.
4) The best interests of creditors test. This exception allows a debtor to file for Chapter 7 even if they exceed the means test threshold if the court determines that it is in the best interests of the creditors to do so.
Depending on the situation, your health condition and the resulting impending loss of income may be considered under the unusual circumstances exception or the best interests of creditors test that enable a debtor to file for Chapter 7 even if they exceed the means test. It would be advisable to consult with a bankruptcy attorney who can thoroughly evaluate your situation, explain these exceptions in more detail, and determine whether you may qualify for Chapter 7 bankruptcy relief.