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Special circumstances
In the bankruptcy means test, special circumstances are the only basis on which a debtor can rebut the presumption of abuse in Chapter 7. The law gives a serious medical condition and a call or order to active duty in the Armed Forces as examples. 1
Talk to a lawyerHow do special circumstances work in the means test?
For individual Chapter 7 filers, the means test decides whether a filing is presumed to be an abuse of the Bankruptcy Code. If it is, the case may be dismissed or converted, usually to Chapter 13. 2
Special circumstances must justify extra expenses, or changes to the income figure the test uses, for which the debtor has no reasonable alternative. They are claimed in their own part of Official Form 122A-2, the Chapter 7 means test calculation. 1 3
Even with full paperwork, the presumption is rebutted only if the additional expenses or adjustments bring the means-test result below the statutory threshold. 1
The statute introduces its examples with the words such as. Whether another situation qualifies depends on the facts and on the court, so it is a question for a bankruptcy lawyer. 1
What must the debtor provide?
| Requirement | What it covers |
|---|---|
| An itemized list 1 | Each additional expense or adjustment of income 1 |
| Documentation 1 | Proof of each expense or adjustment 1 |
| A detailed explanation 1 | Why the special circumstances make the expense or adjustment necessary and reasonable 1 |
| A statement under oath 1 | That the information provided is accurate 1 |
Common questions
Is a high expense enough by itself?
No. The circumstances must justify an expense or income adjustment for which there is no reasonable alternative, and the debtor must itemize it, document it, explain it and attest to it under oath. 1
Does the means test apply to veterans and people on active duty?
Not always. A court may not dismiss or convert a Chapter 7 case based on means testing if the debtor is a disabled veteran whose debts arose mainly during active duty or homeland defense activity, and similar protection covers some people serving on active duty or in homeland defense, during and for a time after that service. 1
What if the presumption is rebutted?
The court can still consider whether the petition was filed in bad faith, or whether the debtor's financial situation as a whole shows abuse. 1
Sources
Over the means test limit because of an unusual expense?
A bankruptcy lawyer in your state can tell you whether it may count as special circumstances.
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