The means test is a method used in Chapter 7 bankruptcy to determine if you are able to repay a minimum amount of unsecured debt after you have paid your allowable monthly expenses. It is used in cases where your current monthly income is greater than the state’s median family income.

If the means test demonstrates that you have the capability to repay a minimum amount of unsecured debt, there is a “presumption of abuse.” In other words, if you obtain a Chapter 7 discharge, this would be considered an abuse of the bankruptcy process because you might have the ability to repay your debts outside of bankruptcy or through a Chapter 13 repayment plan over an allotted time. The evaluation of your circumstances involves the application of particular IRS guidelines for expenses in determining your ability to repay. This will also include a review of your income from the previous six months to decide if you fall above the median income for the state where you live. The IRS guidelines and median income information can be found on the United States Trustee’s website under Means Testing Information.

If you live in Denver, Aurora, Arvada, Brighton, Broomfield, Commerce City, Englewood, Highlands Ranch, Lakewood, Lafayette, Littleton, Northglenn, Westminster, Wheat Ridge, or Golden, Colorado, and have any questions, please feel free to contact me.   Kevin D. Heupel,   Colorado Bankruptcy attorney,   303-955-7570,      Colorado Bankruptcy Help Email, personal bankruptcy free-consultation form