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The chapter 7 bankruptcy means test is one of the largest changes that occured to the federal bankruptcy code in 2005. The means test is supposed to help bankruptcy trustees determine if someone is trying to file bankruptcy even though they can afford to pay some or all of their debts.

The means test averages your income for the six months prior to filing, as well as your spouse, even if you are not both filing bankruptcy or filing together. Then your income is compared to the average for families of your size in your state.

If your income is below the average in your area, you are clear to file ch 7 bankruptcy immediately. If your income is higher you can continue filling out the means test in order to reduce your extra income by including your expenses, which are then compared to averages in your area again.

After deducting your expenses, if you have less than $6575 then you may file ch 7, if you have more than $10,950 you will likely be forced into a chapter 13 or have your bankruptcy dismissed. If you have between $6576 and $10,949, your income will be compared to your unsecured debt and if you can pay at least 25% of your debt, you may be forced into a ch 13.

The bankruptcy means test is probably the most confusing part of filing bankruptcy at this time, and each bankruptcy district has interpreted the means test differently, so if your income is higher than the average in your area, we highly recommend speaking with an attorney if you really believe filing chapter 7 is the right choice for you.