Answer: What is the Means Testing?

The Trustee reviews a consumer debtor's budget as is set forth in a document referred to as a Means Testing form. A consumer case is one where the majority of your debts are consumer in nature(Credit cards, medical bills, house and car debts).The "Means Testing" form analyzes your budget based on congressionally determined guidelines to ensure that you don't have any money left over in your budget to pay on the debts that you are seeking to discharge. Most consumers still qualify for chapter 7 relief in spite of what you may have heard from other sources like debt collectors. Those debtors whose debts consist of a majority of business debts do not have to subject themselves to the "Means Testing" calculation. IRS taxes and business personal guarantys are not considered consumer debts for these purposes.

Median income

Effective March 15, 2011, Median income for a household of

1. is $38294

2. is $55178

3. is $56445

4. is $65477

5. or more you add $7500 per person to 4.

If your income exceeds the median income then we will provide a more detailed "Means Testing" document (budget). If there is less than roughly $100 left over after that analysis then you are eligible for a chapter 7 discharge. The "Means Testing" is the new government defined test and as such is not necessarily logical or simple. It is an attempt to weed out people that can pay back their debts but does not always operate in the way it was intended.

If your income(as defined by congress) less the means testing comes up with more than roughly $100 per month, you may still show special circumstances that would entitle you to chapter 7 relief. Excessive energy or gasoline costs would be an example along with special needs children or health issues. Also unemployment, cessation of second job or cessation of overtime pay would be an example of special circumstance.

Proof of your income for the past 2 months is required to be filed with the petition. That can consist of bank statements, payroll stub from 2 months ago and the most recent stub so that the difference can be calculated. If you are a small business we need to have an accurate accounting of what your income and expenses are.