What is the Means Test for filing a Chapter 7 bankruptcy?
The difference between the debtor’s monthly qualified expenses (less secured payments) and income is multiplied by 60. If that amount is less than $6,000.00, the debtor may file a Chapter 7 bankruptcy. If that amount is greater than $10,000.00, the debtor is prohibited from filing a Chapter 7 bankruptcy. If that amount falls between $6,000.00 and $10,000.00, the debtor may file a Chapter 7 only if that amount is less than 25% of the non-priority unsecured claims. There are provisions to allow additional expenses or adjustments to the income in special circumstances. In most instances, however, if the debtor’s gross family income exceeds the median for families in the debtor’s state, the debtor will probably need to file under Chapter 13 rather than under Chapter 7. The U.S. trustee, bankruptcy administrator or judge can challenge a debtor’s bankruptcy filing in any case where the totality of the debtor’s financial circumstances indicates abuse of the bankruptcy system.
