The Means Test

The Means Test was a change that was added by the 2005 changes to the bankruptcy law. It's designed to force those that make over a certain amount to file a Chapter 13 bankruptcy instead of Chapter 7 under the theory that if the debtor is making over a certain amount of money (the "mean"), then he or she should be required to pay more back.

The initial threshold inquiry is determined by an objective standard based on the location of the debtor and the number of the debtor's dependents. If the debtor makes below the mean for that region and number of dependents, then the presumption of abuse does not arise. If a debtor's income exceeds the initial threshold, then further analysis is necessary. The means test is generally based on income for the past six months. However, certain adjustments for recent or upcoming changes is appropriate. A recent unemployment would factor into the means test, as would recent employment.