The liquidation process under Chapter 7 bankruptcy is the most common form of bankruptcy in the State of Texas. The 2005 Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) amendments brought significant changes to Chapter 7 bankruptcy. Most notably, the 2005 changes subjecting most debtors with an income above the debtor’s state census median income to a 60-month disposable income based test known as the “means test.”

The means test in a bankruptcy case determines who can file for debt forgiveness through Chapter 7 bankruptcy. The means test takes into account the petitioner’s income, expenses, and family size to determine whether the individual has enough disposable income to repay your debts.

In essence, the “means test” helps the courts figure out whether the debtor’s disposable monthly income is higher than a specified floor amount or portion of their debts. If the requirements of the test are not met, the debtor must rebut the presumptions by showing “special circumstances.” For example, if the debtor has more than $182.50 in disposable monthly income, then the debtor faces a presumption of abuse.

If the debtor has an income below the median income in Texas, then the debtor is not subject to the means test. Also, special circumstances allow the debtor to adjust income by documenting additional expenses or loss of income in special and significant situations. Those circumstances could include being called to active military service or being disabled by a medical condition.

Attorney for the Chapter 7 Means Test in Plano, TX

A bankruptcy attorney in Plano, TX, can help you understand how the means test might impact your Chapter 7 case. An attorney can also help you complete the various forms including Bankruptcy Form 122, 122A and the other Forms required under Chapter 7.

Littlefield Law Firm can help you determine whether you qualify for Chapter 7, how the means test works, and what happens if you fail the means test. Contact our experienced bankruptcy attorneys to discuss your case.

Call (972) 812-0900 today.

Means Test

Forms for the Chapter 7 Means Test

When a person files for bankruptcy relief in a chapter 7 case, he or she must complete certain forms including:

  • A Statement of Your Current Monthly Income (Official Form 122A-1);
  • A Statement of Exemption from Presumption of Abuse under § 707(b)(2) (Official Form 122A-1Supp); and if you are not exempt and your income is above the median income
  • Chapter 7 Means Test Calculation (the Official Form 122A-2).

Additionally, when a person files for bankruptcy relief in a Chapter 13 case, he or she must complete the following forms:

  • A Statement of Your Monthly Income and Calculation of Commitment Period (the Official Form 122C-1); and if your income is above the median income
  • A Chapter 13 Calculation of Disposable Income (the Official Form 122C-2).

On the forms, the debtor’s income and expense information are entered. Calculations are made based on the information entered. Although some of the information comes from the debtor’s personal records, other information comes from the Census Bureau and the Internal Revenue Service (IRS).

Additional Resources

USTP Position on Legal Issues Arising Under The Chapter 7 Means Test – Visit the website of the Department of Justice to learn more from the Census Bureau about IRS data and administrative expenses multipliers. Find a line-by-line summary of Form 22A. Use the summary from the United States Trustee Program (USTP) to find recurring disposable income issues that might arise in chapter 7 cases under the BAPCPA provisions of 11 U.S.C. § 707(b). The United States Trustees should, absent unusual circumstances, maintain these positions when interpreting section 707(b) unless the circuit court has decided an issue to the contrary.

Chapter 7 Means Test Calculation – Visit the website of the United States Courts to find the Chapter 7 Means Test Calculation in form number B 122A-2 that became effective on April 1, 2016. This form is derived from official form 22A-2. Find the chapter 7 statement of your current monthly income. This official bankruptcy form was approved by the judicial conference and must be used under Bankruptcy Rule 9009. Find the committee notes and form instructions.