The means test is a mathematical formula that the bankruptcy law used to determine whether an individual has a low enough income to file a Chapter 7 bankruptcy rather than a Chapter 13 bankruptcy, in which he or she will have to make monthly payments to partially repay the debts. If an individual or a married couple have a high enough income to required them to file a Chapter 13 bankruptcy, the means test will also be used to calculate the amount of their monthly payments.
The means test begins with the debtors monthly income, and then subtracts out the allowable expenses which are set by the bankruptcy law, and which are not the same thing as the debtors’ actual monthly expenses. The means test is calculated by household size, and even if a person does not file a joint bankruptcy with their husband or wife, if they are living with their spouse, the husband’s or wife’s income and expenses are considered in calculating whether the debtor qualifies for Chapter 7.
The bankruptcy law is not as clear on who will be considered a dependent as the income tax law is. In fact in bankruptcy the cases do not agree, if someone needs to qualify as a dependent to be a member of the household. In some cases where divorced parents share the custody of children debtors have been allowed to combine the fraction of the time various children and step children live in their house to add up to the total number of household members that will be allowed under the means test.
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