What is the “Means Test”?

The U.S.  Bankruptcy Code applies a “means test” to determine whether an individual debtor’s chapter 7 filing is presumed to be an abuse of the Bankruptcy Code requiring dismissal or conversion of the case (generally to a chapter 13 bankruptcy case).

Abuse is presumed if the debtor’s aggregate current monthly income over 5 years, net of certain statutorily allowed expenses is more than (a) $10,950, or (b) 25% of the debtor’s nonpriority unsecured debt, as long as that amount is at least $6,575. 

A debtor may rebut a presumption of abuse only by a showing of special circumstances that justify additional expenses or adjustments of current monthly income

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