Bankruptcy Means Test

When you file a Chapter 7 bankruptcy petition, the means test is applied to make sure that you really need to file bankruptcy and that you aren’t aabusinga the system. That might sound confusing, but it’s in most cases a simple test, and the majority of debtors do ultimately qualify for Chapter 7 bankruptcy.

The Chapter 7 means test can be thought of as consisting of two stages:

The first stage of the test compares a calculation of your annualized income, based on your average monthly gross income over the 6 months before your petition is filed, to the median income for your area and household size. If your monthly income falls at or below the median, the means test is over – there is no ‘presumption of abuse’ and you can file for bankruptcy under Chapter 7.

That median is determined by your geographic location and the size of your family. In the state of Pennsylvania, for example, the median income figures for cases filed on or after 10/1/2008 are as follows:

Household size 1: ,036

Household size 2: ,051