What is the Means Test?

Under the bankruptcy means test, your Current Monthly Income (CMI) is compared against the state's median CMI to determine if you are eligible to file for Chapter 7.

CMI is the average monthly gross income earned in the six-month period prior to filing for bankruptcy. Included in CMI are financial gifts or assistance from family members, income from a non-filing spouse, income from all job sources, IRA/401k withdrawals, and any income from a closely held business. Social Security income and business expenses are excluded from CMI.

When CMI Exceeds Florida's Median Income When a person's CMI exceeds the state's median income, a number of deductions can be claimed and applied against CMI. Here, a complicated formula is used to deduct certain expenses from CMI in order to determine a person's Net Monthly Income. The formula employed assumes NMI indicates the amount of money a person has each month to pay off creditors.

While there are specific requirements surrounding each, the following expenses are deducted from CMI when determining NMI: housing, living costs, cost of transportation, private school tuition, alimony and/or child support, child care, medical expense, federal tax withholding, internet and phone service costs, health savings accounts.

Our bankruptcy software makes all the calculations - not us. Should you still not pass the Means Test after all deductions are applied then we will refer you to a trusted attorney to represent you because it is inappropriate for anyone who is not a licensed attorney to assist a client in a chapter 13 bankruptcy because it is very complex.

Disposable Income. Please note that it is possible to pass the Means Test and still not qualify to be in a chapter 7 if you have too much disposable income.