Means Test:  5 Commonly Asked Questions

1. What is the means test? In 2005, the federal government changed the laws surrounding bankruptcy and introduced the means test as a pre-requisite.  The means test is used to determine which type of bankruptcy people are eligible for – Chapter 7 or Chapter 13.  It is also used to screen bankruptcy petitioners and to prevent people from filing for bankruptcy as a way to avoid repaying debts.
2. How is the test performed? During the means test, the court will calculate the total income a person earned in the 6  months prior to filing for bankruptcy.  The court will then average that income and compare it to the median income of the state.
3. What if my average income is higher than the state’s median income? If your average income is higher, you will not be eligible to file for Chapter 7 Bankruptcy.  The court will assume that you make too much money and that you are financially capable of repaying your creditors.  You would then have to consider filing for Chapter 13, which would allow you to repay your creditors over a period of 3 to 5 years.
4. What if my average income is lower than the state’s median income? If your average income is lower, you will have passed the means test and will be allowed to move forward with filing for Chapter 7 Bankruptcy.  The court will assume that you are not financially capable of repaying your debts and that you would benefit from having your debts discharged.
5. Is the means test required? Yes, the means test is required.  In order to file for Chapter 7 or Chapter 13, people must take and pass the means test.  If they do not fulfill this requirement, they will not be allowed to move forward with the bankruptcy process.

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The Tucson Bankruptcy Law Firm is comprised of independent Tucson bankruptcy lawyers that handle Chapter 7 and Chapter 13 Bankruptcy cases in Arizona.