With the new bankruptcy law in effect since October 17, 2005, there is a lot of confusion with regard to the new “means test” requirement. The means test is used by the courts to determine eligibility for Chapter 7 or Chapter 13 bankruptcy.

In Chapter 7 cases, the means test determines whether a debtor may obtain Chapter 7 relief. In Chapter 13 cases, the means test determines the amount, if any, that must be paid to unsecured creditors for a plan to be confirmed over the objection of an unsecured creditor or the Chapter 13 trustee. The starting point in means testing is the determination of the debtor’s “current monthly income.” Current monthly income is defined as all of the income received by the debtor in the six months prior to the commencement of the case divided by six. Allowable expenses are then subtracted from current monthly income. The debtor’s allowable expenses are those established by the national and local standards of the Internal Revenue Service, the debtor’s actual expenses in the categories of “other necessary expenses” set by the Internal Revenue Service and certain other expenses allowed as set forth in the Bankruptcy Code itself. A debtor whose net income after consideration of allowable expenses (called, as a term of art, “disposable income”) is either above $182.50 per month or whose disposable income is sufficient to pay a 25% of nonpriority, unsecured claims cannot proceed under Chapter 7 of the Bankruptcy Code.

In many Chapter 13 cases, a similar analysis is employed to determine the amount that unsecured creditors may demand to be paid in the debtor’s Chapter 13 plan. The means testing provisions in Chapter 7 are NOT APPLICABLE to debtors whose current monthly income is less than the median income for the household size in the state in
which the debtor resides.

Bankruptcy Form 22A is the form chapter 7 debtors will complete for “means testing” purposes; Form 22C is the form chapter 13 debtors will complete. A debtor must enter income and expense information onto the appropriate form (i.e., Form 22A or Form 22C)and then make calculations using the information entered. Some of the information needed to complete these forms, such as a debtor’s current monthly income, comes from the debtor’s own personal records. However, other information needed to complete the forms comes from the Census Bureau and the Internal Revenue Service (IRS).

In order to obtain State Median Family Income information necessary to complete the Bankruptcy forms, visit the following website:
In order to obtain National and Local Standards information necessary to complete the Bankruptcy forms, visit the following website:,,id=96543,00.html

Dunne Law Offices, P.C.
(215) 854-6342
1500 JFK Blvd, 2 Penn Center, Suite 200
Philadelphia, PA 19102