Recap: CMI is unrelated to the slightly-different acronym on the backs of the windbreakers of those guys on TV. You know, the all-in-one lab-geeks-slash-witness interrogators-slash-quick-on-the-draw-in-a-shootout, Crime Scene Investigators. They certainly do it all, the intrepid Sin City scientists-with-guns, every Thursday night on the eye network, CBS. Which stands for Columbia Broadcasting System, though usually people assume the C is for Central.

Where was I? Right, CMI. Current Monthly Income. But that tells you little, because here in Bankruptcy Land, things are not what they seem and words are not what they mean. Current Monthly Income is the Congressional coinage for a particular look-back period. When we assess your eligibility to file for chapter 7 bankruptcy, we look at your past gross income, specifically the six months prior to the month in which you file your petition. And the average monthly gross for those past six months is called Current Monthly Income. Makes sense, doesn't it? No, you're right, it doesn't. Not only that, but a lot of people confuse it with crime shows on the telly. But there is method in the madness.

Eligibility to file for chapter 7 bankruptcy is income-centric. If you're rolling in it, then you can pay back your debts. If your income is low, then maybe you need a clean slate so you can build a future, not wallow in the quicksand that is debt. Fair enough. The confusion arises when the debtor loses her job. Example? Sure.

Asaph Abrams asks his potential client ("PC" in lawyer-speak or "Apple" if they boot faster), Sookie, what her income is. She replies, it's only $1000. This is her consideration from a monthly moonlighting gig. Sookie asserts that she knows she qualifies for lucky number seven. But she's not exactly right. Yours truly learns that Sookie just got terminated from a very well-paying waitressing position. A patron's paw went wayward and Sookie slapped him good. The lascivious barfly wound up in hospital (Brits omit "the" in that phrase. I'm not an anglophile, but I'm all for economy). It wasn't Sookie's hand that caused the damage, it was the hot chili bowl she dropped in the slapping process. Injuring the customer isn't good business, so Sookie's employer let her go. And here she is.

I ask Sookie what her average income was before she got fired. She says, $6,000 from her waitressing and her moonlighting, combined. Now, that's well above the single-person median here in Cali. If you're above the median, you don't proceed to attempt your chapter 7 just yet. You move on to step 2, which entails expense-analysis. Sookie's home was foreclosed upon a while back and she's been renting a single room for cheap. She drives a beater she bought for cash. She has no special medical needs at present. In short, Sookie's budget for the prior six-months would have enabled allocation of funds to repayment of her debt. When the debtor has significant disposable income, they're expected to direct it to a chapter 13 repayment plan rather than discharge it gratis in a chapter 7. But that's then and this is now. There is no money for a chapter 13 for Sookie. Nevertheless, bankruptcy law holds Sookie to her past income in calculating eligibility. Is there method in that madness? Yes. How so?

It would not be equitable if a six-figure earner could wipe out all debt the moment she's laid off. You could argue that the past is past and bankruptcy should address the present. But, the rationale of looking back is that prior income is an indication of one's earning potential. Before granting the presumptive privilege of a fresher chapter 7 (as opposed to a mere fresh chapter 13) start, the debtor is given time to restore that proven ability to earn. If the past was not considered at all, debtors could abuse the system by "losing" employment on Friday, filing bankruptcy on Monday, then "regain" employment once a discharge is granted. The six-month period in which one's average income can decrease is arguable a necessary trial period. Pursuant to an above-median job loss, are you really a below-median earner or is this a fleeting setback?

Problem is, workers are not rebounding easily in these hard times. Consequently, the period of decreasing past average-income is a state of limbo. It is expected that one diligently seek employment for the purpose of repaying one's debts. But the CMI formula triggers a dilemma. When handed a rifle, you need choose: replace it in its scabbard, or blow your foot off. A footless life is difficult to traverse. In reality, this dilemma is not likely. In hard times, it is difficult to regain employment before the average past income would fall below median. If Sookie doesn't get a replacement job in 3 months, then at that time, her average gross income will have fallen below the median. She'll presumptively qualify for a chapter 7. Note, that presumptive eligibility is not conclusive eligibility. There are always exceptions.

Whoa, stop! What if you don't have the "luxury" of waiting to file? What if debt's hand is snatching your earnings by way of garnishment: a quarter for every dollar you earn? In that case, you can still file, notwithstanding the inconsistency between present income and your Current Monthly Income (CMI), which is the average for your past six months. But, you'd have to rebut the presumption that the CMI income should determine eligibility. You'd argue that present circumstances should dictate your treatment. Rebuttal implies an uphill battle. But sometimes we must rebut.

So that's the eligibility question. Or at least one facet. Myriad considerations get mulled over before you file for bankruptcy. In these blogatory spacial confines, I won't attempt to touch more than a pinprick on the tip of the bankruptcy iceberg.

Now, what happens afterwards, once the petition is sent on its way? What about going to court?

The debtor rarely goes to court in bankruptcy and that's a good thing. But you must attend a Meeting of Creditors... which is a meeting where creditors do not appear. Mostly. Thus, I give you another bankruptcy misnomer. Because here in Bankruptcy Land, things are not what they seem and words are not what they mean. And of the Meeting of Creditors, we'll talk next week.

The above is not legal advice. It doesn't address specifics and nuances and it shouldn't be relied upon. Median income and other figures and benchmarks change frequently. It is strongly recommended that you seek local legal counsel in contemplation of bankruptcy.