Means Test

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The Means Test say that if income is not at a certain level, it does not qualify for benefits from federal or state programs.

Examples are programs such as foods stamps and Medicaid.

In Section 707(b)(2) of the Bankruptcy Code, a Means Test is used to determine whether an individual debtor's chapter 7 filing is presumed to be an abuse of the Bankruptcy Code requiring dismissal or conversion of the case (generally to chapter 13). Abuse is presumed if the debtor's aggregate current monthly income over 5 years, net of certain statutorily allowed expenses is more than (i) $10,000, or (ii) 25% of the debtor's nonpriority unsecured debt, as long as that amount is at least $6,000. The debtor may rebut a presumption of abuse only by a showing of special circumstances that justify additional expenses or adjustments of current monthly income.

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