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Means Test

The means test is a test applied to determe if the debtor’s case can be filed under Chapter 7.  Only individual consumer debtors are required to undergo the test. This test is based on the monthly income of the debtor.  If the debtor’s income is already under the median income, then the debtor is exempted from the means test and a presumption is made that the debtor will be eligible to file the petition under Chapter 7.  The purpose of the means test is to put a check on unnecessary filing and to ensure that nobody abuses the court process.

For the purpose of determining the means test, the debtor is required to fill out Form 22A.  Form 22A is a statement by the debtor regarding his current monthly income and calculations.  In filling out Form 22A the debtor may be required to submit personal and tax records.  The median income level varies state by state.  There are roughly 57 questions to be answered on Form 22A.

The means test is calculated in accordance with provision 11 USCS § 707(b)(2)(A)(I).  The first phase of means test is to see if the income of the debtor is below the median income of his/her state.  For example, if the median income level in California is $77,014, a California resident whose income is below this amount qualifies to file under Chapter 7.  If the debtor does not qualify under this phase, the debtor is tested under the next phase.  In this phase, a calculation is made between the debtor’s disposable income and his/her unsecured debts.  Here, the court separates a certain percentage of income as disposable income of the debtor.  If the court finds that after deducting this percentage from the total income the debtor’s income falls below the median income level then the debtor qualifies.  If the debtor fails the means test for Chapter 7 the debtor still has the option of filing under the other chapters of the Bankruptcy code.

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