Does CalPERS Income Count in California Chapter 7 Means Test?

Question from JT, Does CalPERS Income Count in California Chapter 7 Means Test?

Answer from AI:

In California, when filing for Chapter 7 bankruptcy, the treatment of CalPERS income in the means test depends on the nature and timing of the income received. Here’s a breakdown:

1. Understanding the Means Test: The means test determines eligibility for Chapter 7 by assessing whether you have sufficient disposable income to repay part of your debts. If your income is below the state median, you automatically qualify.

2. CalPERS Income Types:

   • Regular Payments: Monthly retirement benefits from CalPERS are typically considered “current monthly income” under the means test. These regular payments are likely included in the calculation.
   • Lump-Sum Distributions: If received during the 6-month lookback period, these may be averaged into your income. If received before this period, they might not be included.

3. Exemptions and Considerations:

   • Exemptions: While California exemptions protect retirement funds from creditors, they don’t necessarily exclude them from the means test.
   • Case Law: Courts have varied rulings; some exclude lump sums if not part of regular income, while others include them based on timing.

4. Conclusion: Generally, regular CalPERS payments are included in the means test, whereas lump sums may be excluded or included based on specific circumstances. Consulting a bankruptcy attorney is crucial for accurate assessment and compliance.

For more details, you can visit the U.S. Courts website.