BANKRUPTCY MEANS TEST

Means Test: Part One

In part one of the means test, the consumer’s gross income is compared to the median gross income in the state where the consumer lives. All income received by the consumer from most sources during the six months prior to filing is summed, then divided by six to arrive at a monthly average. This monthly average is then multiplied by 12 to arrive at annual gross income. The calculated annual income is then compared to the state-wide median for a family the same size as the consumer’s family. Shown below is the median income table for California effective for cases filed after March 15, 2011. These figures are updated on a regular basis.


STATE 1 EARNER 2 PEOPLE 3 PEOPLE 4 PEOPLE*
CALIFORNIA $48,009 $62,970 $68,670 $78,869

*  Add $7,500 for each individual in excess of 4.


If the consumer’s family income is below the statewide median, it is presumed that a filing under Chapter 7 would not be abusive.

Means Test: Part Two

If the consumer’s family income is above the median, part-two of the test is then completed whereby the consumer’s reasonable and necessary expenses are deducted to determine whether the person has the ability to repay all or a portion of his/her unsecured creditors. If after deductions it is shown that the consumer does not have the ability to repay a significant portion of his/her unsecured debts, the consumer may proceed without a presumption of abuse.

Means testing can be complex, particularly in close cases. Our office can assist, and we can generally advise with a high degree of confidence whether your case would pass the test after our initial consultation.

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