The Complete Guide to Means Test Analysis

The means test. Love it or hate it (and let's be honest, every bankruptcy attorney has strong opinions about it), you can't escape it. Form 122 — the Chapter 7 Statement of Your Current Monthly Income — is the gateway question in every Chapter 7 bankruptcy. Miss it, and you could be facing a dismissal motion under 707(b). Get it right, and your client gets a fresh start.

At its core, the means test answers one question: Does this debtor have enough monthly disposable income to justify a Chapter 13 repayment plan? If yes, they're "above median" for their state, and there's a presumption of abuse. If no, they pass the test, and Chapter 7 is available (absent other bad faith).

The calculation itself is mechanical, but it's brutally detailed. You're taking the debtor's current monthly income (six months of paystubs), comparing it to the state median, then if they're above median, running them through the disposable income calculation. Allowed expenses follow IRS standards that can feel arbitrary (Allowance for Food, Clothing and Personal Care: $400-600, depending on household size). Vehicle expenses have their own maze. Mortgage calculations. Utility standards. A dozen special expenses that never apply but you have to check anyway.

Here's the good news: The structure is consistent. Every means test follows the same template. And once you've done 50 of them, you start seeing patterns. The debtor with the side gig that pushes them above median. The divorced client whose child support lowers their disposable income. The retiree living on Social Security who passes by page two. Expertise isn't genius. It's pattern recognition.

The real test of means test mastery isn't the calculation. It's the strategy. How do you position expenses? Are there deductions you're missing? Should this case be Chapter 7 or Chapter 13? What will the trustee challenge? Good means test analysis is the foundation of good bankruptcy representation.