The Means Test

In 2005 the credit card companies and the banks lobbied Congress to pass what is called the “Means Test.”

This is a rigid and unrealistic test to determine whether you “qualify” for a bankruptcy.

The essence of this test is that your gross income (before any deductions) is compared against the median income for your geographic region, and then “permitted” expenses are subtracted. After that test, if you make more than the median income, even if it is by one penny, then there is a “presumption of abuse” and you must then prove you are actually facing difficulty. Your individual circumstances are totally irrelevant to this test.

For most people considering bankruptcy, this test will not be problem. But you must consult with an attorney to know whether you will qualify. This test is very complex, and there are many rules which have to be followed. In fact, it is deliberately complex to make filing bankruptcy harder. So do not assume that you qualify for bankruptcy. Talk to an attorney.

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