What Is The Means Test Form 122A In A Chapter 7 Bankruptcy?

The “means test” Form 122A in a Chapter 7 bankruptcy case is surrounded by myth, flawed perceptions, and misinformation.  For many people it can be a scary prospect. You hear a lot of conflicting talk in the media about the means test, and everyone seems to have an opinion about one thing or another.  Some people say it means one thing, and 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 two-part analysis that is filed with your case. Technically, it is Form 122A-1, titled “Chapter 7 Statement of Your Current Monthly Income” and Bankruptcy Form 122A-2, “Chapter 7 Means Test Calculation.” The gist of the test 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. Those numbers are then compared against the average income and expense numbers of same sized households in your county. Based on this analysis, certain other steps then come into play to determine which chapter of the bankruptcy code a person would need to file under.  Sound simple?  Well, it isn’t.  Not at all.  Some people think that the means test is the end-all, be-all of someone’s case.  

That just isn’t true.  There are two major misunderstandings surrounding the means test.

The first misunderstanding is that making the calculation itself is simple, plug-and-chug issue.  People mistakenly believe that the data to be used in the calculation is simple and easy to locate.  This is not true.  It takes experience and skill to know what numbers even to use in the initial calculation.

The second misunderstanding is that the result produced by the means test is absolute and infallible.  People believe that the answer produced is final and inescapable.  Again, this is absolutely untrue.  Rather than being an ending point for a bankruptcy case, the means test is really just the starting point in the overall analysis.

It’s critically important to keep these two points in mind:

The initial means test results are just a first step.  It’s just one of the many factors that are weighed in considering which chapter a person files under.  Why?  Simply because for many 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 now or in the future.  No one’s life is fixed and static.  Income and expenses very often fluctuate, sometimes significantly so.  Additionally, accurately listing all of your expenses are very important to this analysis.  You are allowed deductions for a lot more things than you might believe.

If the means test numbers do not really reflect your present or future income, a rebuttal of the means test can be filed in your case.  This rebuttal explains to the bankruptcy court why you should be allowed to deviate from the means test calculation results.  Additionally, some debtors with business-related debts don’t even have to do it. 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.

Despite all the noise, despite all the nail-biting, despite all the propaganda, in practice it is often 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.

So, bottom line: do not freak out about the means test.  Do not panic about the means test.  Do not think you can calculate your means test information yourself.  This is an art, not a rigid science.  A lot of variables go into the mix, including case law, judicial rulings, and many other factors.  With an experienced attorney handling your case, you will find that it is not as big of a deal as you might have thought.

The Kansas City attorneys at Phillips & Thomas, LLC have been helping people navigate the bankruptcy means test since the very first day it was implemented in 2005.  If you would like to schedule a free consultation with us regarding it, please call 913-385-9900 or send an email to phillipsandthomas@gmail.com.  If you would like to read more about bankruptcy on our site, please click here for Consumer Or Personal Bankruptcy or please click here for Business Or Corporate Bankruptcy.