You hear a lot of talk out there about the bankruptcy “means test.” in a Chapter 7 bankruptcy. Some people say it means one thing, some people say it means something else. A book says one thing, a website says another. Everyone’s an expert, right? Wrong.
What is the means test? It is a rather complicated analysis that is filed with your case. It is bankruptcy Form 22A and is formally called the Statement of Current Monthly Income and Means-Test Calculation. The gist of it is that a debtor has to provide income and expense information for the six months before the month of the filing of his or her case. Based on this analysis, certain other steps then come into play to determine which chapter of the bankruptcy code a person files under. Sound simple? Well, it isn’t. Some people think that the means test is the end-all, be-all of someone’s case. That isn’t true.
The means test results are just a first step. It’s just one of the factors that are weighed in considering which chapter a person files under. Why? Simply because for most people, the six months preceding the month of filing of a case are not an accurate indication of what their normal monthly income and expenses are. No one’s life is fixed and static. Income and expenses very often fluctuate, sometimes significantly so. This is why it is so important to have an attorney who knows all the nuances of the means test, all the relevant case law about the means test, and all the local rules for your jurisdiction. It’s very complicated, and without an experienced attorney you may not receive the favorable consideration on your case that you deserve.
The reality is that the bankruptcy means test is not that big of a deal. Despite all the noise, despite all the nail-biting, despite all the propaganda, in practice it is not as big of a deal as everyone makes it out to be. This is because there are so many techniques, exceptions, and other factors that tend to make it a lot less fearsome than people think.
Some debtors with business-related debts don’t even have to do it. The means test itself is not some set-in-stone thing that never changes. You are allowed deductions for a lot more things than you might believe. And most importantly, there is no magical, “one size fits all” approach to it that can be made. The means test is only a STARTING POINT. It’s just one of many variables that will determine which chapter of the bankruptcy code is best for you. Only an experienced attorney who practices in the area in which your case will be filed is going to know all the local rules, nuances, and variations in how it’s prepared.
So, bottom line: don’t freak out about the means test. With an experienced attorney handling your case, you will find that it is not as big of a deal as you might have thought.