Help Center

Unemployment Benefits Should be Excluded from a Debtors Current Monthly Income in Bankruptcy Means Test According to Latest ABI Poll

February 16, 2012, Alexandria, Va.— A majority of respondents in a recent ABI Quick Poll believe that unemployment benefits should be excluded from the debtor’s current monthly income (CMI) for means testing purposes because they qualify as “benefits received under the Social Security Act.” Fifty-eight percent agree (43 percent “strongly agreed” and 15 percent “somewhat agreed”) that unemployment benefits should be excluded from the debtor’s CMI as part of the means test in bankruptcy. The means test, created by the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, applies a formula to determine whether or not a debtor has enough money available to make some minimal payment to creditors in a chapter 13 bankruptcy plan, or if they are eligible for a chapter 7 liquidation. As part of the test, "current monthly income" as stated in 11 U.S.C. § 101(10A)(B), “includes any amount paid by any entity other than the debtor...on a regular basis for the household expenses of the debtor or the debtor’s dependents...but excludes benefits received under the Social Security Act." Bankruptcy court rulings have been divided over what benefits are directly or indirectly related to the Social Security Act and therefore excluded from CMI. Thirty-seven respondents to the current poll disagreed (24 percent “strongly disagreed” and 13 percent “somewhat disagreed”) that unemployment benefits should be excluded from the debtor’s current monthly income (CMI) for means testing purposes because they qualify as “benefits received under the Social Security Act.” Two percent “did not know or had no opinion” on the question. ABI’s Quick Poll is posted on ABI’s home page, www.abiworld.org. ABI members and the public are invited to respond to a question on a timely bankruptcy or insolvency issue. Visit http://www.abiworld.net/quickpoll/ to access the results of previous ABI Quick Polls.