Means Test

What does Means Test mean?

The means test in bankruptcy was established in 2005 by the Bankruptcy Abuse Prevention and Consumer Protection Act. The means test was designed to determine whether an individual debtor's Chapter 7 filing is presumed to be an abuse of the Bankruptcy Code requiring dismissal or conversion of the case, generally to Chapter 13 (see Abuse).

A debtor who wants to file Chapter 7 bankruptcy must either be at or below the median income for the same size of family within the state where they filed or they must be able to pass the means test. If the debtor is below the medium income for the state in which they filed, they are automatically qualified to file a Chapter 7 bankruptcy, assuming they meet all other qualifying criteria of the bankruptcy laws.

If the debtor's income is not low enough, they must pass the means test to file Chapter 7. To pass the Chapter 7 means a debtor must have less than $166.66 of disposable monthly income (DMI). By passing the means test, a filer can file a Chapter 7 bankruptcy without having to show special circumstances. Many times, however, a filing debtor's means test calculations are challenged.

Whether or not you will be challenged usually depends on your financial situation, your lawyer, the creditors and the district bankruptcy court where you have to file. Talk to a bankruptcy lawyer if you have questions about the Chapter 7 Means test.

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Means Test

The means test was designed to determine whether an individual debtor\'s Chapter 7 filing is presumed to be an abuse of the Bankruptcy Code requiring dismissal or conversion of the case, generally to Chapter 13 (see Abuse).

Category: bankruptcy