Purpose of the Means Test.  The Means Test is used in Chapter 7 bankruptcy cases to determine if you qualify to file for Chapter 7 bankruptcy.  The Means Test is used in Chapter 13 bankruptcy cases to determine how much "disposable income" you have left over each month to pay your unsecured creditors. 

 

Exemption from the Means Test.  You are exempt from taking the Means Test if more than 50% of your debt to be discharged is classified as business debt (incurred for business purposes, such as a loan for tools or equipment, commercial rent, or supplies used in a business).  You are also exempt from taking the Means Test if you are either a disabled veteran with at least a 30% disability and most of your debts were incurred while you were on active duty or performing homeland defense activies or you served as a Reservist or National Guard on active duty or performed homeland defense activities for at least 90 days after September 11, 2001; the exemption covers the 90 days and 540 days afterward.

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How the Means Test is Calculated.  Your gross income averaged over the prior 6 months is compared to the median household income for your state.  Even if your spouse will not be filing for bankruptcy with you, your spouse's income will need to be included in the calculation.  The median income is determined by the U.S. Census Bureau.  If your average household income is less than the median income for a household your size, then you qualify to file for Chapter 7 bankruptcy.  Currently in Florida, the median household income amounts are as follows:

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1 Person     2 People       3 People         

$65,801       $81,109          $93,983             

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4 People      Each Additional Person 

$107,712      $11,100 per each person

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If Average Gross Income Exceeds the Median Household Income.  If your calculated average gross household income exceeds the designated median household income, you can take the second part of the Means Test which allows you to subtract necessary expenses such as housing, utilities, food, clothing, medical bills, and transportation, from your average gross income.  Most of the expenses you are allowed to deduct are determined by IRS National Standards as opposed to your actual expenses.  Additionally, you are allowed to deduct secured debt payments such as mortgages and car loans as well as payments on non-dischargable debts like tax liens.