Means Test

Under the Bankruptcy Code, a means test is used to determine whether the debtor’s attempted use of a chapter 7 filing is an abuse of the Code. If abuse is found, the court can either dismiss the claim or convert it to a chapter 13 filing. Abuse is presumed where the debtor’s monthly income, after subtracting certain expenses, is more than $12,850, or 25% of the debtor’s nonpriority unsecured debt, as long as that amount is at least $7,700. The presumption is rebuttable where the debtor can show certain statutorily defined special circumstances.