Magic Formula for Bankruptcy Means Test ?

Magic Formula for Bankruptcy Means Test ?

You may have been searching under bankruptcy instead of calling a bankruptcy attorney you may have now come across what is called the Means Test . If so, many issues arise confusing readers desiring bankruptcy. The answer is not to read but call The Law Offices of Richard D. Granvold PS to discuss bankruptcy first. But here are some issues involving said test you may appreciate reading.

1. What is the Means Test as it is nicknamed?

The bankruptcy “means test” determines whether your income is low enough for you to file Chapter 7 bankruptcy. It’s a formula designed to keep filers with higher incomes from filing for Chapter 7 bankruptcy . High income filers who fail the means test may use Chapter 13 bankruptcy to repay a portion of their debts, but may not use Chapter 7 bankruptcy to wipe out their debts altogether. However, having to take the Chapter 7 means test doesn’t mean that you must be penniless in order to use Chapter 7 bankruptcy. You can earn significant monthly income and still qualify for Chapter 7 bankruptcy if you have the type of expenses allowed as deductions on such test, such as high mortgage , car loan payments, child support, maintenance, income taxes, mandatory union dues and mandatory retirement account contributions for example, as well as other expenses.
Magic Tricks to Beating the means test: A knowledgeable attorney is what is needed as there are actions a person may take if not passing at first. Why? See below on expense side of said test.

2. Are you EXCLUDED from having to in fact file a Means Test? The Thresh-hold issue: most are not excluded ! If none of the below applies, then the means test must be calculated!

A. Primarily Non-Consumer Debts: If your debts are NOT primarily “consumer debts” then the statute may possibly not apply to you but if you are married, the exclusion may apply to possibly only one of you. The term “consumer debts” is defined as “incurred by and individual primarily for a personal, family, or household purpose”. If your debts are primarily non-consumer then there is no presumption of abuse! (Many court cases argue the terms in this section also).
Student Loans Affect on Means Test. Richard D. Granvold recently had a case in which over 50% of the debts were for a student loan which was listed as Non-Consumer debt and thus the test was not required and client pleased in not having to file a 5 year chapter 13 case. This is not “sneaky”, rather, it is the law. But only a knowledgeable attorney arguing such results can help a debtor avoid time on the test or help a chapter 13 client only be required to be in a 3 year plan, not a 5 year plan.

B. Are you a disabled Veteran as defined in 38 USC Section 3741? If yes, then the issue is “did you incur debts mostly while you were on active duty or while you were performing a homeland defense activity”? If so, then there is a presumption of no abuse !

C. Were you a Reservist or member of the National Guard? If you were called to active duty or did you perform a homeland defense activity ? 10 USC Section 101(d); 32 USC Section 901(1) governs those terms. If (a) you were called to active duty after 9-11-01 for at least 90 days and remain on active duty, or (b) you were called to active duty after 9-11-01 for at least 90 days and then was released from active duty on a date fewer than 540 days before your bankruptcy is filed, or ( c ) you are performing a homeland defense activity now for at least 90 days, or (d) you preformed a homeland defense activity for at least 90 days ending on a date which is fewer than 540 days before your bankruptcy is filed. If one of the above 4 apply, then there is a presumption of no abuse!

3. Attorney Fees to Beat the Means Test Are Often Worth Incurring. Most attorneys charge for work on the means test as it takes time to do and carefully analyze ! Only 3-4% of persons filing bankruptcy exceed the income limits of the means test. As a result, there is substantial time that an attorney must spend to do that work. But would you rather file a 5 years chapter 13 case, or a 3 month chapter 7 case? Huge breathtaking difference. The Law Office of Richard D. Granvold PS provides a means test letter to clients to help explain this test, to try and keep attorney fees down , and to help inform clients of various things affecting the Means Test. Many persons filing who exceed those limits become frustrated as their fees increase and for that reason many attorneys will not do those type of cases. The Law Office of Richard D. Granvold PS will work on those hard cases and advise on how to in fact beat the test if at all possible which many clients have followed such advice to do so..

A. Beware of False Misleading Blogs Proclaiming if the Income level is exceeded that a Chapter 13 must be filed. Not always true at all. Do not listed to such bad advice . Instead find out if you can BEAT that test anyway by calling The Law Offices of Richard D. Granvold PS. If your income fails the test, should you wait to file? There are two sides to the test: if your income exceeds the amount of such test then a decision must be made: should you wait to file if you believe the future calculated test will decrease? If in fact you have older months in the 6 month period that are higher than the next several months then that is a reason normally to wait to calculate later and not do the expense side yet. Or you can pay the attorney to do the expense side of the test to see if you can pass that test ; if you pass, great..but if you don’t, then you can wait and pay to redo that test later in the year at a favorable time when your income will decrease. That delay causes more attorney fees to redo that test but it is worth it.

Wait and Beat the Means Test on Income side, or try to beat on Expense side? When I receive a case where the income fails to pass the test I do NOT do the expense side yet until my client states to do so as they are paying for my time! I have never had a client complaint about helping them save money. So when you receive advice that you fail to beat the test on the income side, a well informed client should then ask if the attorney should conduct the expense side or wait till the 6 month average decreases and or 6 month income test increases .

Math is simple. Simply write down your gross income for all debtors in the prior six months (excluding the month you are in) and compare to the present and future couple months. If you calculate your gross income to decrease, then is there a reason NOT to wait?

Attack Income by Tricks of Reducing. Can you stop some or all work for a time? Stop unemployment? Wait till Baby is born? Etc.

Present Income test figures: There is substantial court cases on how many persons in a household can be claimed for use to the test and some children on part time basis adds even more complexity to the law.

Simply stated, all gross income of all types must be included except social security income, or few others. Each State has its own median income for a certain household size. In Washington State , the following amounts are the current incomes but change every 2-5 or so months . EFFECTIVE 4-1-21 These figures usually change every 4-5 months. Why no change since 4-1-21? United States Trustee gives this reason: “The Census Bureau will not release updated median income totals by state and family size in 2021 due to data quality issues associated with the COVID-19 pandemic. As a result, the U.S. Trustee Program will not post updated median income totals until a Consumer Price Index adjustment in spring 2022″ . Thus, sometime April or so of 2022 said figures may finally change again. They will be posted on Bankruptcy Court’s Websites.

1 person household: $5,921
2 person household: $7,186
3 person household: $8,329
4 person household: $9,463
5 person household: $10,213
6 person household: $10,963 (add $750 a month for each person after 6 if more in household)

If you are pregnant make sure your attorney knows that as some clients may wait till the baby is born so that the household size increases to beat the test!

B. Preparing Expense Side of the Means Test. If you instruct your attorney to go ahead and prepare the expense side of the means test then they can do so and advise you of the results. Ask them for a copy if desired.

For those whose household income exceeds the state median, the means test computations get significantly more complex. The law makes a calculation that will determine whether you have enough income left over (called “disposable income”), after paying your “allowed” monthly expenses, to pay off at least a portion of your unsecured debts (such as credit card bills). If your disposable income adds up to more than a certain amount, you fail the means test and may possibly then not be able to file for Chapter 7 bankruptcy but there are exceptions to that rule too.

Median income levels vary by state and household size, and each county and metropolitan region has different allowed amounts for categories of expenses: basic necessities, housing, and transportation. Other expenses your attorney will be discussing with you also to capitalize on beating that test. And in a chapter 13 case, it may reduce the monthly payment required by law.

4. Even if the Means Test is not passed by itself does not mean a chapter 7 cannot be filed.

First, you can still file a chapter 7 possibly either with or without an attorney’s help . However, the US Department of Justice must sign an attorney to investigate your case and it is possible you could be ordered to pay their attorney fees if they successfully argue your case should be dismissed. That US DOJ attorney MUST also file a Statement of Abuse also when they confirm it was not a mistake and that your case is presumed an abuse. Then after they review facts, they may either then file a motion to dismiss or file a statement as to why they will not object. They often ask a debtor to sign a declaration concerning why the case is not an abuse in light of the factors that case law provides may support it.

The Law Office of Richard D. Granvold PS often includes a statement with the Means Test to advise the Court ahead of time of said reasons to help reduce attorney fees while assisting that analysis by the US DOJ.

Popular Reasons to File Chapter 7 Despite not beating the Means Test. An example of when there may be no objection is when the debtor’s income has plummeted now and they no longer receive that prior 6 month average income! For example, a recent house sale my result in not beating the test unless the debtor waits till 7 months later so as to avoid the month in which the house was sold. But the debtor may need to file now for various reasons . A careful knowledgeable bankruptcy attorney knows those options and should discuss with you.

Normally, noone prefers to be in a 5 year chapter 13 case which is normally the option if the means test is not passed! That is why a careful analysis of said test for the persons with higher income is certainly needed for the best results.

5. Tricks and advice to take various actions to help attempt to beat the means test when you don’t beat it to begin with. You may have read MANY places where it is stated, if you don’t pass the means test then you must file a chapter 13 and that is NOT always true! There are sometimes actions that an attorney may advise a client to take to try and beat the test once the calculations are made.

Aggressive Cut Above the Rest Attorney May Reveal Advice on Actions to take. For example, if you failed by $300 a month, but could increase your medical insurance a month by $301, and or increase term life insurance (not whole life) a small amount, or purchase a financed much needed vehicle before filing, etc. you may beat the test. These are merely examples of what a vigorous attorney must carefully analyze to help you beat the test.

6. What if you cannot pass that test and advised NOT to try a ch 7?

First, you can file a ch 13 case instead. In such event BEFORE an attorney proceeds any
further the law requires you to have a chapter 13 fee contract signed by your attorney as required by federal law. The local Western Washington Court Rule governs chapter 13 fees and provides normally $4,000 in such cases for attorneys which some attorneys charge. Some charge an hourly rate and your fees could exceed $6,000 or more easily depending on such needed work.

Second, after the chapter 13 documents and contracts are provided to you, then the chapter 13 means test will be done which is slightly different than a chapter 7 means test . When done, the results should be discussed with you. Richard D. Granvold prefers clients to be in the office to go over such results as it is faster and thus cheaper, and suggestions, or changes, can be done fast.

7. Simply Passing the Means Test does NOT equate that you should file a Ch. 7 case! There are reasons to file a ch 13 case instead of a ch 7 case. For example, some debts are not discharged in chapter 7 but are in a chapter 13 case. Also, a debtor’s income and expenses on Schedules I and J may establish that the debtor should NOT be in a ch 7 but rather a ch 13 case as they have substantial disposable income available for creditors. But the Means Test can affect how much is paid in a chapter 13 case and thus, changes in gross income and means test allowed expenses can affect drastically that resulting monthly 5 year payment.

8. COVID 19: Special Payments from Federal Government are not included in INCOME for the means test either.


As established above, when needed, informing a client in a means test case on various aspects to it before reviewing with an attorney helps to keep attorney fees down. Many persons read false Means Test blogs or website information on such test results believing they in fact did not pass the test when they in fact could either now , or in the future with careful guided advice. Victory over such test is not magical, it is with guided legal advice. For that reason, call an attorney who understands how to provide that advice to accomplish the best result for your situation. A cookie-cutter approach cannot help you; rather, careful analysis, scrutiny, and advice is what you deserve.
If you need bankruptcy assistance because of your debts then call the Law Offices of Richard D. Granvold PS . He completes cases the same day or within two business days to file your case. Richard D. Granvold has represented over 8,700 persons to file bankruptcy. Over 105  5 star reviews on Google and See his website at

Good luck.