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What is the Means Test?

Under the bankruptcy means test, your Current Monthly Income (CMI) is compared against the state's median CMI to determine if you are eligible to file for Chapter 7 bankruptcy.

CMI is the average monthly gross income earned in the six month period prior to filing for bankruptcy. Included in CMI are financial gifts or assistance from family members, income from a non-filing spouse, income from all job sources, and any income from a closely held business. Social Security income and business expenses are excluded from CMI.

When CMI Exceeds Florida's Median Income
When a person's CMI exceeds the state's median income, a number of deductions can be claimed and applied against CMI. Here, a complicated formula is used to deduct certain expenses from CMI in order to determine a person's Net Monthly Income (NMI). The formula employed assumes NMI indicates the amount of money a person has each month to pay off creditors.

While there are specific requirements surrounding each, the following expenses are deducted from CMI when determining NMI:  housing, living costs, cost of transportation, private school tuition, alimony and/or child support, child care, medical expense, federal tax withholding, internet and phone service costs, health savings accounts

Qualifying for Chapter 7

If your NMI is in excess of $166.66, you are not eligible to file for bankruptcy under Chapter 7. However, you may apply for an adjustment in your expenses if job loss, illness, costly child care payments, or a substantial pay cut impacts your financial situation. You can apply for a special circumstances waiver which allows you to file for Chapter 7 without having to first pass the means test. You will have to convince the court your expenses are genuine and that you have no other means or alternative of discharging your debt except through Chapter 7 bankruptcy.

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Florida Bankruptcy Services