The Means Test: Don’t Try This at Home

21 Aug The Means Test: Don’t Try This at Home

The “means test” is complicated and, as is much of the new bankruptcy law, is interpreted in wildly different ways throughout the country.  Don’t try to take the test on your own.

The means test has been justifiably criticized since the new bankruptcy law (“BAPCPA”) went into effect in 2005.  In fact, the means test may well be one of the most idiotic bankruptcy provisions ever conceived.  Completing the means test form is very complicated.  If you don’t understand what the means test is, click here to see an overview by Bankruptcy Law Network’s Cathy Moran or this article by Nicholas Ortiz.

I think of the means test as a tax return of sorts.  The stated purpose is to determine whether the debtor should be allowed to wipe out his debts in a Chapter 7 bankruptcy, with no repayment, or whether the debtor should be required to file a Chapter 13 bankruptcy and pay back some, or perhaps even all, of his debts.  The means test’s other purpose is to determine how much a Chapter 13 debtor should be required to pay back to his general unsecured creditors.

There are two very important things you should understand about the means test.  First, it is extremely complicated.  In many instances the form is not clear about how it should be prepared, what expenses should be deducted, and what expenses should not.  Second, because the new bankruptcy law is so poorly drafted, courts have interpreted the means test as well as its significance in vastly different ways in different areas of the country.

There are online means tests debtors may take on their own.  DON’T DO THIS!  Unless you are very familiar with the test and with the judicial decisions interpreting the means test in your bankruptcy district, you are not qualified to complete the test or understand the significance of any results you might get.

By way of example, I recently had clients in my office who completed an online means test and said that they “passed it.”  They moved to South Carolina and had not been able to sell their former home in another state, but still had a mortgage on that home.  The debtors planned on surrendering that home in their bankruptcy case, but they still deducted that mortgage payment as an allowable expense on the means test.  Unfortunately, you can’t do that in South Carolina because of Judge David R. Duncan’s ruling in In re Ray, 362 B.R. 680 (Bankr. D.S.C. 2007).  This is just one example of many to show how the means test is interpreted in radically different ways in different parts of the country.

So as for the means test: Don’t try this at home!  Get a qualified bankruptcy attorney to help you evaluate your case.

Written by Charleston Bankruptcy Lawyer, Russell A. DeMott

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Russell A. DeMott is a Charleston, South Carolina bankruptcy lawyer who represents consumer debtors in Chapter 7 and Chapter 13 bankruptcy. He is the author of the Charleston Bankruptcy Blog. He is also a member of the South Carolina Bankruptcy Blog. He files bankruptcy cases for clients in the Charleston, South Carolina division, which runs from Myrtle Beach to Beaufort. The DeMott Law Firm also represents clients in foreclosure defense and mortgage modification. You can also connect with Russ on Google Plus Russell DeMott. Russ can be contacted directly at (843) 695-0830 or by email at

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