What is the means test?
The means test is a bankruptcy law test aimed at preventing abusive bankruptcy filings.
What are the steps in computing the means test?
The first step in the means test is to compare your income to the median income in your state for a family the same size as yours.
What are the median family incomes for Florida?
Two people – $52,259
Three people – $58,574
Four people – $68,009
Five people – $75,909
Six people – $82,809
What if I am below or equal to the median family income for Florida?
The debtor will likely be able to file for Chapter 7 bankruptcy.
What if I am above the median family income for Florida?
If you are above the median family income, it doesn’t mean you can’t qualify for Chapter 7 bankruptcy, rather it triggers the second part of the means test.
What is the second part of the means test?
The second part of the means test calculates the debtor’s “disposable income.” The debtor’s income is subtracted by certain allowable expenses that are determined by the IRS; the result is your disposable income.
What type of expenses are included in the means test?
Necessary expenses for the debtor’s and dependents’ health and disability insurance.
Continuing payments for the care and support of the elderly, ill, or disabled.
Expenses necessary to send dependent children to elementary or secondary school.
Expenses specified by the IRS national standard for food, clothing, personal care, and entertainment.
Expenses specified by the IRS local standard for transportation and housing.
Certain excess expenses for utilities.
What happens after all the expenses are deducted?
If, after subtracting all the expenses, the debtor’s monthly income is less than $109.58, abuse will not be presumed and the debtor will be able to file a Chapter 7 bankruptcy
If the debtor’s monthly income is greater than $182.50 the debtor will not be able to file for Chapter 7.
If the debtor’s monthly income is between 109.58 and 182.50 then the court will perform further calculations to analyze a presumption of abuseShmucher Law, PL, a bankruptcy law firm, represents debtors, creditors, and trustees in bankruptcy matters throughout Broward and Miami-Dade counties.