New Bankruptcy Means Test Figures Released

Starting on April 1, 2013, bankruptcy filers will be required to use new figures when completing means test calculations. Those new figures include updated median family income numbers for each state, and new national, regional, and local expense standards.

What Is the Means Test?

In Chapter 7 bankruptcy, you must go through a series of calculations to determine if you qualify for Chapter 7 bankruptcy. This is called the means test. The purpose of the means test is to see if you could fund a Chapter 13 repayment plan. If you can, you cannot file for Chapter 7. To learn more visit Nolo’s Chapter 7 Means Test topic area.

These figures play a role in Chapter 13 bankruptcy as well.  To learn how your family median income and expenses affect your Chapter 13 bankruptcy, visit Nolo’s Chapter 13 Repayment Plan topic area.

Median Family Income

The first step is to determine if your family income is more or less than the median family income in your state for a family of your size. Those median income figures just changed.  You can find the new numbers on the U.S. Trustee’s website at www.justice.gov/ust. Choose Means Testing Information, pick the correct date range, choose “go” and then on the next screen, click on Median Family Income Based on State.

If your income is less than the median for your state, you can file for Chapter 7.  If it’s greater, you must go through more calculations to see if you can pass the means test.

Expense Standards and the Means Test 

In this next part of the test, you subtract certain allowed expenses from your income. If you have a certain amount left over, you will not pass the means test and you won’t be allowed to file for Chapter 7.

For some expenses, you can subtract the actual amount you spend. For others, you must use national, regional, or local figures. Those have also changed as of April 1, 2013. To find the new expenses standards, visit the U.S. Trustee’s website at www.justice.gov/ust, choose Means Testing Information, choose the correct date range, and then scroll down to find the various types of expenses (such as food and clothing , housing, health care, and transportation).