Free Bankruptcy Means Test Calculator For Your State, County & Zip Code - Based on Bankruptcy Form 22A
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New Median Income standards, |
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Median Income for |
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Median Income standards effective November 1, 2012 through March 31, 2013 |
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| Persons in Household | Monthly | Annual | Monthly | Annual | % Change |
Source: U.S. Trustee, U.S. Department of Justice (for cases filed Between Nov 1, 2012, and March 31, 2013, Inclusive) Note. The means test is but one of several hoops you must jump through. Even if your income is low, a judge can prevent you from filing Chapter 7 if it appears that you have enough income to repay a substantial portion of your debts in a 3-year Chapter 13 plan. |
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Casper | Cheyenne |Help Topics
- What is the Means Test?
- Do I need to complete the Means Test?
- How long does it take?
- Household Size
(When is a family of 3 not a family of 3?) - Roommates & domestic partners? contributions to household income
- Other noteworthy calculators on the Web
- If I pass the Means Test, can a judge still prevent me from filing for Chapter 7 bankruptcy?
- If I fail the Means Test, can a judge still let me file for Chapter 7 bankruptcy?
- What are "priority claims" on line 44?
What
is the means test?
You may have read that the new bankruptcy law imposes a "means test" on who can file for Chapter 7 bankruptcy.
You might think this new test will prevent you from filing. But, chances are, you're wrong. Most people considering bankruptcy have no trouble passing the means test. Indeed, some lawyers think more people will qualify for Chapter 7 under this test than under the old law, where judges had no fixed formula.
Use this calculator find out where you stand.
The Formula
The law now uses a standard mathematical formula to determine whether you can file for Chapter 7 -- or, to put it in legal terms, whether filing for Chapter 7 would be an 'abuse' of the bankruptcy system. (Those who fail the means test, are left with a Chapter 13 repayment plan as their only bankruptcy option.)
The means test is actually a two-part test and you only need to pass one of them to qualify for Chapter 7.
Test 1. "Median Income"
This is a very simple test that compares your average household
income for the past six calendar months to the median income for your
state, If your income is below the median, you qualify for Chapter 7.
If it is above the median, you must pass Test 2.
Test 2. "Disposable Income"
This test deducts expenses from your income to determine how much you
can pay your unsecured creditors over the next five years:
- If you can pay at least $11,725 ($195.42 per month), you can't file for Chapter 7.
- If you can pay at least $7,025 ( about $117 per month) and that is at least 25% of what you currently owe your unsecured creditors, you can't file for Chapter 7.
- If your disposable income is less than $117 per month, you can file for Chapter 7.
Certain deductions are standard allowances based on the number of vehicles you operate, the number of people in your household, and the cost of living in Berrien County.
In addition, to these standard deductions, you can also deduct the full amount of certain actual expenses such as mortgage and vehicle loan payments.
Do
I need to complete the means test?
If you are filing for Chapter 13 bankruptcy, you do not need to complete the means test. However, you do need to complete a form almost identical to it — and that will determine how much you must pay in a Chapter 13 plan.
If you want to file for Chapter 7 bankruptcy, you must at least complete the first part of the form to figure your "current monthly income" (CMI), which is based on your average income over the past six calendar months. That number will determine whether you must complete the rest of the form.
If your CMI is below the median income for Georgia for a household your size, then you do not need to complete the means test.
If your CMI is higher than the median for Georgia for a household your size, you must complete the means test to compute your monthly "disposable" income (that is, income minus expenses). The result of that computation will determine whether you are eligible for Chapter 7 bankruptcy.
How
long does this take?
Using this calculator takes about 20 minutes. For some, the answer may be obvious after only a few questions.
Is it private?
This calculator is completely anonymous. We do not ask -- and no not want -- any personally identifying information linking you to these numbers, other than a zip code. We do keep statistical data on amounts that user have entered, so that the site may monitor the needs of its users and adjust services accordingly. However, To us, this is data for statistical analysis only. For more information. See the privacy notice.
Garbage in, garbage out
If you don't put in the correct numbers in the correct blanks, this calculator won't give you an accurate result. It only does the math. It is your responsibility to put the right numbers in the right blanks. Helpful resources are available throughout the test to help you figure out what the form is asking for and what to put where.
Be sure to account for all the different kinds of income you receive. If you're not sure what to put in an 'expense' blank, skip it. You may find that it doesn't' matter -- that is, you may qualify regardless of what number you put in that blank.
If you need assistance, this website has listing of books and local services that offer bankruptcy help.
Where to find the Official Means Test form
If you end up actually filing for Chapter 7 bankruptcy you need to fill
out official
form (22A). which you can find here.
This calculator is based on that form.
Household
Size: When is a family of 3 not a family of 3?
The issue of household size can be tricky in cases of shared custody, children who live at college part of the year, or non-custodial children living in the household.
There will undoubtedly be litigation on this subject. The official form seems to suggest that the issue is whether the person is part of the household and is a dependent. (That is, you can't include a roommate who is not your dependent in your household size, yet you may have to include the portion of their income that contributes to the overall income of the household. See the help topic on that subject. This can be an issue for same-sex couples who cannot legally marry.)
RELATED INFO:
In April 2010, the United States Trustee's office issued a PDF of their official position on legal issues surrounding each line of the Chapter 7 means test form 22A. Keep in mind that the Trustee tends to protect creditor interests, so a debtor's bankruptcy attorney may not agree with every one of these positions. That said, if you can easily pass the means test under the trustee's relatively stingy interpretation of the rules, all the better.
The U.S. Trustee's Office's official statement (released April 2010) on how to fill out form 22A
takes the the following position on how to fill out the means test:
Line 14, Applicable median family income.
- "Applicable state" is state of residence at filing.
- If married and two different households, residence is where most family members reside.
- If no plurality of family members are in any one state, use state of spouse with highest income.
- "Household size" is the debtor, debtor's spouse, and any dependents that the debtor could claim under IRS dependency tests. The USTP uses the same IRS test for the definition of both"household" and "family." IRS Publication 501 explains the IRS tests for "dependent."
- The USTP departs from the IRS dependent test (as does the IRS when it determines family size for collection purposes) in cases justifying "reasonable exceptions" (e.g. a long standing economic unit of unmarried individuals and their children). However, if an individual is counted as a family member for median income purposes, that individual's income should be included as income on Part II of Form 22A .
Line 8 of the means test:
- Includes payments made monthly, quarterly, or annually.
- Includes payments regardless of written agreement with contributor.
- Includes payments from roommate, partner, parent, or relative, regardless of whether living with debtor.
- Includes payments made directly to creditors on behalf of debtor, e.g., rent, car, or insurance.
- Does not include payments from non-filing spouse (which are already included as income in Column B).
Contributions
of roommates or domestic partners to household income
At least one site on the web has addressed this issue. King's Bankruptcy Media (a lawyer's website) states what appears to be the correct rule: that, if a roommate or domestic partner is contributing income to the household, then that portion of the roommate's income must be included in the overall amount of 'household income' on line 8 of the official form, where it asks for "contributions to household income."
RELATED INFO:
The U.S. Trustee's Office's official statement (released April 2010) on how to fill out form 22A
takes the the following position on how to fill out the means test:
Line 14, Applicable median family income.
- "Applicable state" is state of residence at filing.
- If married and two different households, residence is where most family members reside.
- If no plurality of family members are in any one state, use state of spouse with highest income.
- "Household size" is the debtor, debtor's spouse, and any dependents that the debtor could claim under IRS dependency tests. The USTP uses the same IRS test for the definition of both"household" and "family." IRS Publication 501 explains the IRS tests for "dependent."
- The USTP departs from the IRS dependent test (as does the IRS when it determines family size for collection purposes) in cases justifying "reasonable exceptions" (e.g. a long standing economic unit of unmarried individuals and their children). However, if an individual is counted as a family member for median income purposes, that individual's income should be included as income on Part II of Form 22A .
Line 8, Any amounts paid by another person or entity, on a regular basis, for the household expenses of the debtor or the debtor's dependents, including child or spousal support.
- Includes payments made monthly, quarterly, or annually.
- Includes payments regardless of written agreement with contributor.
- Includes payments from roommate, partner, parent, or relative, regardless of whether living with debtor.
- Includes payments made directly to creditors on behalf of debtor, e.g., rent, car, or insurance.
- Does not include payments from non-filing spouse (which are already included as income in Column B).
Other
Noteworthy Calculators on the Web
CNN/Money Magazine's Budget Calculator compares your monthly expenses to national averages for people with your income and home situation. It's not localized by location.
The bankruptcy court for the Middle District of Florida provides an Excel worksheet of a means test calculator, but it only has figures for counties in that Florida district, and the numbers have not been updated since 2007.
ChooseToSave.org offers an extensive list of calculators for all types of financial decisions including car loans, credit cards, college savings, to retirement savings options.
If
I Pass the Means Test, Can I still be barred from filing bankruptcy?
Yes, you can still be barred from filing Chapter 7 bankruptcy.
Passing the means test removes one barrier: it means that you are not "presumed" to be "abusing" the bankruptcy system under 707(b)(2). It is an essential first step, and for most people, that is that. They are clear to file.
However, in some cases, a bankruptcy judge may rule that case should be dismissed becuase to the "totality of the circumstances" under 707(b)(3).
Example 1: In Iowa, a judge ruled that a debtor was abusing the system because in the year preceding his bankruptcy, he received substantial sums of money from various sources and spent it all on unnecessary indulgences, rather than pay down his debt. In re James, 345 B.R. 664 (Bkrtcy.N.D.Iowa 2006).
And, while the means test income analysis looks backward, a court can use 707(b)(3) to look forward.
Example 2: In another example, a Northern California court denied a debtor the right to file Chapter 7 because the debtor was about to have a substantial increase in income. In re Pak, 343 B.R. 239 (Bkrtcy.N.D.Cal. 2006).
If
I fail the Means Test, can a judge allow me to
file anyway?
Yes, a judge can allow you to file for Chapter 7 bankruptcy even if you fail the means test, but only you are able able to show "special circumstances."
Some examples of possible "special circumstances" are job loss or pay cut, a serious medical condition, or unusually high child care expenses. You must be able to produce proof of your expenses and that your expenses are reasonable -- and that you have no reasonable alternative.
What
are "priority claims"?
This is a technical term used in bankruptcy law. A list of the most common priority claims can be found on Form 10 (Proof of Claim). These include
- past due debts for child and spousal support,
- most unpaid taxes, and wages,
- salaries or commissions you owe to employees and
- contributions you owe to an employee benefit fund.
The full list of the nine types of
priority debt is found in section 507(a) of the bankruptcy code.
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