The “Means” Test

What is The “Means” Test?

The Means Test: The biggest misconception about the 2005 bankruptcy law changes is that people who make more than the state median income no longer qualify for bankruptcy. This is not true. Above median, debtors are now required to complete the “Means Test” to see if the formula indicates that they might have discretionary income available to repay some or all of their debts in a Chapter 13 bankruptcy case. Many above-median debtors still qualify for Chapter 7 bankruptcy, and those who don´t may have other options, including Chapter 13 bankruptcy, that will protect them from their creditors. I specialize in getting people whose income is greater than the means test approved for Chapter 7.



The “new” bankruptcy law imposes heavy burdens on bankrupt debtors that were not required under the old law. One of the most burdensome of the 2005 changes in the income and expense test is called the “Means Test”, which attempts to try to standardize bankruptcy law. The Means Test was added because the creditors convinced Congress that many people were filing Chapter 7 bankruptcy even though they had the means to repay some or all of their debts, and they wanted a formula to help push those individuals into Chapter 13.

Read More

Under the “old” law

The Bankruptcy Court reviewed debtors’ actual income and expenses to see if they could afford to repay their debts. The Means Test formula is based upon IRS collection standards, which may not leave families with enough to realistically live on. It doesn’t seem to reflect the true needs of many families and doesn’t take into account actual spending upon certain necessities such as gasoline or car maintenance. It certainly doesn’t take into account rapidly increasing gas or food prices.

Read More


How It Works-A Brief Synopsis

The means test was added to the Bankruptcy Code to create objective standards for determining which individuals are “worthy” of relief in Chapter 7. It applies only to individuals and only those individuals whose debt is primarily consumer debt.

The means test is calculated by comparing the debtor’s average income for the past six months (current monthly income), annualized, to the median income for households of the same size in the debtor’s state of residence. If the debtor’s income is less than or equal to the state median income, the debtor “passes” the means test and may file Chapter 7. The median annual income for San Diego County for a single person is $48,009.00. For a married couple, it is $62,970.00.

Read More

We are a debt relief agency.