If you are thinking about filing for bankruptcy and you receive a private pension payment each month, instead of or in addition to social security checks, be aware that the pension is treated differently on the bankruptcy forms and in the calculations that determine the course of your case.
Simply put, the pension must be reported as income on both the “means test” forms, and on Schedule I, where each debtor’s monthly income is itemized.
Social security checks are NOT listed on the means test forms, but they ARE included in monthly income on schedule I.
There are different means test form for Chapter 7 and Chapter 13.
For Chapter 7 (simple) cases, it’s Form 122A, “Statement of current monthly income / means test.” This form is used to compare your gross income and family size with the state average, to see if you qualify for Chapter 7. Pension payments should be listed on this form, but social security payments should not. (If you’re paying attention, yes, this means that if your only income is social security, you automatically qualify for Chapter 7).
For Chapter 13 cases, something similar to a means test is found on Form 122C, “Current Monthly Income / Disposible Income.” This form is used to determine the length of your Chapter 13 case (between 36 and 60 months), and in some cases to determine what your monthly payment to the bankruptcy trustee will be. Again, private pension payments must be listed, but social security payments are omitted.
In addition, every debtor must itemize their monthly income on Schedule I, a form used in all bankruptcy cases (Chapters 7, 11, 12 & 13, etc.). Here, debtors must list pension income as well as social security income as well as anything else (wages, dividends, the kitchen sink). The grand total is compared to your monthly expenses, listed on Schedule J.
As just a rough example, imagine a debtor with who gets a $1,000.00 pension check each month, and also gets $1,000.00 from social security. If their monthly expenses on schedule J total $1,900, they could afford a $100 / month Chapter 13 plan payment.
The issue about pensions came up not so long ago in the Sjogren case, where newly minted Springfield, Mass. bankruptcy judge Elizabeth D. Katz ruled that pension income has to go on the means test form, because Congress did not create a specific exemption for it when drafting the Bankruptcy Code.