The Means Test
The Means Test is used to determine if filers are eligiable to file for relief under Chapter 7 of the Bankruptcy Code. The information provided here is for informational purposes only. Every situation is unique.
The first step in applying the means test is to look at average income for the 6 months prior to filing and compare it to the median income for that state.If the income is below the median, then Chapter 7 remains open as an option. If the income exceeds the median, the remaining parts of the means test comes into play.
| Means Test Median Incomes as of 3/15/09 |
| Household Size | Median Income |
| 1 | $47,355 |
2 | $60.049 |
3 | $68,830 |
| 4 | $81,184 |
If the debtor's income exceeds state median income, a further analysis is performed, looking at the debtor's calculated ability to fund a Chapter 13 plan. The debtor's disposable income is calculated applying a mix of actual and standardized expenses to the debtor's previous average income! If the debtor can pay $10,950 in five years or as little as $182.50/month to creditors, a presumption arises that a Chapter 7 filing is "abusive".The presumption of abuse may be rebutted by the debtor by presenting facts and circumstances not provided for in the prescribed test. One obvious "special circumstance" might be that the debtor is now unemployed and doesn't really have the ability to pay that the artificial test suggests.
The following flow chart, created by Judge Maureen Tighe of the United States Bankruptcy Court, Central District of California, explains the test.
Means Test Chart