Means Test

Category: legal

A financial calculation used to determine if an individual debtor has enough disposable income to repay their debts.

The means test is the "gatekeeper." Implemented in 2005 to prevent abuse of the system, it looks at your last six months of income. If you make more than the median income in your state and have disposable cash left over, you "fail" the test and are banned from filing Chapter 7; you must file a Chapter 13 repayment plan instead.

Common Examples

• Because his engineering salary was well above the state median, he failed the means test and was forced to file a Chapter 13 repayment plan.
• The means test calculation includes complex deductions for standard living expenses, which requires a specialized bankruptcy attorney to navigate accurately.