The Means Test was implemented as part of the 2005 bankruptcy reforms with the goal of making it more difficult for those with the “means” to pay back their creditors to file for chapter 7 bankruptcy. The means test looks at a consumers current monthly income or “CMI.” CMI is defined as average gross earnings over the last six months. If your household income is below your state’s average for a household of your size, the means test does not come into play and you have a green light to the chapter 7 341 meeting. If your household income exceeds your state’s average, it will be necessary to crunch the numbers to determine if you pass the means test and are therefore eligible for chapter 7 relief. The Means test deducts “allowed expenses” such as transportation costs from your income. If after expenses you have very little disposable income, you will qualify for chapter 7. Keep in mind however, that a holiday bonus will be counted as current monthly income for Means Test purposes. Your salary alone may be below the state average or your expenses may be great enough to qaulify for chapter 7 absent a large holiday bonus. When the bonus is added to the mix, it may temporarily inflate your income causing a failing grade on the Means Test.

If you have questions about bankruptcy, contact an attorney.