The new bankruptcy laws passed in 2005 created some new forms that must now be completed in a bankruptcy petition, one of which is the bankruptcy means test for those filing chapter 7 bankruptcy. The courts created the means test in order to see if you have enough disposable income to pay your debts, instead of having them discharged in bankruptcy. The means test must be finished along with credit counseling and a personal financial management course.

Your income and expenses are listed on the means test and them compared to norms for your area and family size. If you are a disabled veteran or most of your debt is not consumer debt, you only have to complete a portion of the means test. The “presumption” is a nice way of saying whether or not you may be trying to abuse the bankruptcy system. If the presumption does arise at the end of the means test you may be forced to file a Chapter 13 bankruptcy.

You will list your income on the second part of the means test. Depending on how you file, you and your spouse will submit your income from business, rent, interest, child support, pension and other income for the last 6 months. The third section will determine your average yearly income and compare it to the median family income based on the state you live in, and the size of your family. If your income is more than the average for your family size in your state you will have to continue filling out the means test, if it is less, then the presumption does not arise.

In part five you will deduct standard expenses for your family based on regional numbers the government has declared as acceptable for your area and family size, such as groceries, mortgage or rent, utilities and your car.

The final part is determining how much money you have left over each month. The presumption does not arise if you have under $6575 a year leftover, if you have over $10,950 the presumption does arise, if your available income is in-between there, then you have to continue the form to compare your unsecured debt to your left over income.

The bankruptcy means test is confusing, so consulting a bankruptcy attorney is always a good option before you file bankruptcy.