What is means testing?

Means testing is a method of determining a person’s eligibility to maintain a chapter 7 case.  Under means testing a person whose current monthly income from all sources multiplied by 12 exceeds the median annual income, as reported by the U.S. Census Bureau, for the person’s state and family size, must show that he or she is not able to pay a minimum of $109.58 per month for 60 months to his or her unsecured creditors from his or her disposable monthly income in order to be eligible to maintain a chapter 7 case.  Disposable monthly income is a person’s current monthly income from all sources less the person’s permitted current monthly expenses.  The chapter 7 case of a person whose disposable monthly income is such that he or she is deemed to be able to pay $109.58 per month or more to unsecured creditors for 60 months will be dismissed or converted to chapter 13 unless special circumstances exist.

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