The Florida Means Test for Chapter 7 Bankruptcy

The means test is the income-based qualification screen for Chapter 7 bankruptcy. Congress added it in the 2005 BAPCPA amendments to push higher-income filers into Chapter 13 repayment plans. For most Miami filers, the means test is a procedural check rather than an obstacle – if your household income is at or below the Florida median for your household size, you pass the means test automatically.

Step One: The Current Monthly Income Calculation

"Current monthly income" (CMI) is the average of all the household's gross income from all sources over the six full calendar months immediately preceding the filing month. It includes:

• Wages, salary, tips, commissions, bonuses
• Net income from operating a business (gross revenue minus ordinary and necessary business expenses)
• Rental income (net)
• Interest, dividends, and royalties
• Pension and retirement income
• Unemployment compensation (with some courts treating it as excluded)
• Regular contributions to household expenses by non-filing spouses, family members, or others

Social Security retirement and disability benefits are excluded from current monthly income by statute. So are most damages received on account of war crimes, terrorism, or international war.

The six-month average is annualized (multiplied by 12) to produce an annualized income figure compared against the Florida median.

Step Two: Comparison to the Florida Median Income

The Census Bureau publishes annual median family-income figures by state and household size. The U.S. Trustee Program then publishes adjusted figures used for bankruptcy purposes. As of recent figures, the Florida medians are approximately (subject to update):

• 1-person household: ~$58,000
• 2-person household: ~$74,000
• 3-person household: ~$84,000
• 4-person household: ~$98,000
• Each additional household member: add ~$9,900

Current figures are published on the U.S. Trustee Program website. If your annualized CMI is at or below the median for your household size, you pass the means test and are presumed to qualify for Chapter 7. The case proceeds normally.

Step Three: The Second-Part Means Test (Above-Median Filers)

If income is above the Florida median, the analysis continues. The debtor completes Form 122A-2, which subtracts a long list of allowed expenses from CMI to determine "monthly disposable income." Expense categories include:

• IRS national and local standards for food, clothing, personal care, housekeeping supplies, transportation, housing and utilities (varying by county)
• Actual expenses for certain items: taxes (income, payroll, real-property), term life insurance, court-ordered payments, child care, education for dependent children, health insurance, telecom, secured-debt payments
• Priority debts being paid in installments
• Administrative expenses of a hypothetical Chapter 13 case

The result is "monthly disposable income," which is multiplied by 60 to produce "60-month disposable income."

The presumption of abuse arises if 60-month disposable income exceeds:

• $15,150 (the upper threshold, adjusted periodically); or
• $9,075 AND at least 25% of non-priority unsecured debt

If the presumption arises, Chapter 7 is presumptively unavailable absent special circumstances. The debtor's options are typically to file Chapter 13 instead or to demonstrate special circumstances (extraordinary medical expenses, lost income, etc.) sufficient to rebut the presumption.

"Special Circumstances" Rebuttal

Section 707(b)(2)(B) of the Bankruptcy Code allows above-median filers to rebut the presumption of abuse by showing special circumstances – for example, a recent serious illness, a job loss after the six-month lookback period, military deployment, or other facts that materially change the debtor's actual financial picture. The rebuttal must be supported by documentation and is decided on a case-by-case basis.

Section 707(b)(3) Totality of the Circumstances

Even passing the mathematical means test does not guarantee Chapter 7 will be available. The U.S. Trustee can move to dismiss for "abuse" under the totality of the circumstances if the debtor's actual financial situation shows ability to pay a meaningful portion of unsecured debt. This rarely arises for clients with genuinely difficult finances.

Practical Implications

• Self-employed filers should pay close attention to the six-month income lookback – timing the filing around a low-income period (without manipulation) often makes the difference.
• Recently unemployed filers are sometimes better off waiting a few months until the six-month average reflects the new reality.
• Households with a non-filing spouse must include the non-filing spouse's income for CMI purposes (with limited adjustments for portions not used for household expenses).
• Multiple income earners and Social Security recipients often face complicated calculations that reward careful preparation.

Schedule a Consultation

The means test is straightforward when income is clearly below or clearly above the median, and more strategic in the middle range. Call 786-522-1411 or email [email protected] to run the means test on your numbers.