Current Monthly Income (CMI)
What does Current Monthly Income (CMI) mean?
According to the U.S. Bankruptcy Court, a debtor’s current monthly income is the “average monthly income received from all sources, derived during the 6 full months before the debtor files bankruptcy.”
For example, if the debtor is filing on September 15, the debtor would consider the months from March 1 to August 31. Current monthly income would be derived from adding all the income for this 6 month period and dividing the product by six. If both spouses are filing bankruptcy jointly income from both spouses must be included in the calculation.
How is Currently Monthly Income (CMI) used?
After 2005, filing Chapter 7 bankruptcy became much more difficult. Congress passed legislation limiting certain high income earners from filing Chapter 7 and immediately discharging their debts. Now, certain debtors must pass a means test, which in large part determines whether the debtor’s current monthly income is too high to file Chapter 7 bankruptcy.
For example, the first step in the means test determines whether your annualized CMI (for a family of equal size) is below the median income for your state. If it is, you can automatically file Chapter 7 bankruptcy. If not, additional means testing must be done to determine if you have sufficient disposable income to make payments on your debts.
What income is considered Current Monthly Income?
A debtor’s current monthly income will include most of their income from most sources, but it does not include benefits or payments received under the Social Security Act or those received as a victim or war crimes, crimes against humanity, or domestic/international terrorism.
Current monthly income will include the following income: tips, salaries, bonuses, overtime, commission, income from rental property, income from professional farms, interest, dividends, royalties, regular contributions from other people for household expenses, child support, spousal support, unemployment benefits, and state disability benefits.
Talk a lawyer if the CMI calculation does not accurately reflect your annualized CMI. For example, if you are a seasonal worker you may receive the lion’s share of your income in certain months. If you have received a large part of your income in the last six months this may not reflect your actual annualized CMI. Talk to the court to see if you can still qualify for Chapter 7 bankruptcy.