Credit and Bankruptcy Law


What is the means test?

The “means test”—a requirement of the 2005 Bankruptcy Abuse Prevention Act—requires that a debtor show whether he or she has sufficient means to avoid bankruptcy. This test compares a consumer’s debts with their income to determine if they have sufficient means to avoid Chapter 7 bankruptcy. The consumer provides his or her current monthly income as compared with their regular debts.

Congress adopted this requirement in the law to prevent abusive filings by those seeking Chapter 7 discharges when they really could pay their creditors. Sometimes the application of the means test results in individuals having to file Chapter 13 instead of Chapter 7, which means they have to pay a greater portion of their debts back to creditors. The form for the means test is available at

Declaring bankruptcy should be a step taken only if one is completely without other options, and not just a convenient method to avoid paying back creditors (iStock).

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