Houston Bankruptcy Judge Jeffrey Bohm recently held that it was not "reasonable and necessary" for a couple in bankruptcy to budget $170 per month for smoking cigarettes. Actually, this holding was based on the fact that he determined the couple failed the Chapter 7 "means test" for other reasons, but he went on to hold that even if they had passed the "means test," then the debtors would not be eligible for Chapter 7 because their case should be dismissed based on the "totality of circumstances," and that therefore their case was an abuse of the provisions of Chapter 7 and should be dismissed. The Debtors' net monthly income was $4866.32 and the expenses that they claimed totaled $4930.00.

The Debtors were allowed most of their other claimed expenses, but the Court held that they could not claim an "ownership" expense on their means test if they weren't currently paying for a vehicle (the primary holding of the case), nor could they claim $495 per month as "anticipated" car payments. They were allowed to continue to pay $55 for a time share.

Most people seeking to file Chapter 7 bankruptcy easily "pass" the means test, and are allowed to file Chapter 7. But if you earn more than the median income for your state, you have to qualify based on the your debt structure, certain other expenses that you have, etc. And like in this case, even if you do pass the means test, the judge can decide that you just make too much money to file Chapter 7 and just "walk" on all your debts. Of course you can still file Chapter 13, and repay part or all of your debts over a period of time, while being protected from your creditors.

As part of your first free consultation with me, I review your assets, debts, income and expenses and review all of your options with you, including bankruptcy and non-bankruptcy options. This free consultation is only available to residents of the Houston, Texas metropolitan area. Please call 713-772-8037 to make an appointment with me.