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VanDLaw, Attorney
Category: Bankruptcy Law
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Experience:  Chapter 7 & 13
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Is unemployment compensation considered as income when determining

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Is unemployment compensation considered as income when determining if I fall under the state median income level to be eligible to file for chapter 7 bankruptcy in the state of louisiana?
Submitted: 8 years ago.
Category: Bankruptcy Law
Expert:  VanDLaw replied 8 years ago.



Most bankruptcy courts deem unemployment compensation received as part of the Social Security benefit and are therefore not counted in calculating the means test. However, you must still list in the means test schedule, just list as separate under the Social Security Act. There will be a section to put the unemployment in.

Unemployment compensation is given special treatment. Because the federal government provides funding for state unemployment compensation under the Social Security Act, there may be a dispute about whether unemployment compensation is a "benefit received under the Social Security Act." The forms take no position on the merits of this argument, but give debtors the option of reporting unemployment compensation separately from the CMI calculation. This separate reporting allows parties in interest to determine the materiality of an exclusion of unemployment compensation and to challenge it. In plain English this means, report it separately. It may not affect the result of the test. If it does, it will be a "material" issue that the debtor may want to assert.


Your bankruptcy attorney can explain further, as each state has ruled on this subject separately.



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