The Bankruptcy Means Test, enacted in 2005 is part of comprehensive bankruptcy reform lobbied for mainly by the credit card industry.  One of the main objectives was to force more individuals to file Chapter 13, requiring monthly payments instead of Chapter 7. This does not mean individuals can no longer file Chapter 7. In fact, many people still qualify for relief under Chapter 7. 

Aside from the business debt exception, everyone must fill out and pass the means test to file Chapter 7 bankruptcy, absent “special circumstances.”  So what exactly is the Means Test and is the North Carolina Means Test different in Charlotte versus Monroe NC?  Well- the means test looks at an individual’s last 6 months of income and compares that to national and local averages to determine if an individual has the ability to pay money back in a Chapter 13, or if they are entitled to file Chapter 7 bankruptcy.  The means test is actually a multi-part test that is constantly changing based on adjustments of national income numbers and expenses, in addition to interpretation of the law by the Court.  Do not assume that because you make more than the annual income number for your household size that you do not pass the means test. 

It is very important to have an attorney review your individual situation, rather than rely on a means test calculator.  Form 22A of the Bankruptcy Means Test is very rigid and many individuals may not pass now, but may pass next month.  Many overlooked deductions that help individuals qualify include: Health and Term Life Insurance, contributions to charity and elderly parents, secured debt payments, and many others.  For those who do not pass the means test, there are options such as Chapter 13 and debt negotiation.  The attorneys at Stone & Witt, P.A. strive to explain all options to clients so they can make an informed decision on their financial future.