August 25th, 2009 by Reed Allmand 
Bankruptcy involves a very thorough review of your financial situation. An icky but necessary process. Obviously you and your attorney need to examine your broken balance sheet in order to know what needs to be fixed and how to fix it. Part of that process will be determining whether or not you are qualified to file Chapter 7 bankruptcy through a means test.
Simply put, a means test is a standard measure of income and expenses, used to demonstrate a person’s anticipated ability or inability to repay their debt
Working with a qualified attorney, you and your spouse will need to complete Bankruptcy Form 22A “Chapter 7 Statement of Current Monthly Income and Means-Test Calculation”. The form looks similar to a standard tax form, with specific questions pertaining to income. You will be asked to report income from all sources, including salary, wages, interest, rent and unemployment.
If your household income is less than the median family income for a family of your size in your state, then you qualify for Chapter 7. If your income exceeds the median income for your state, then you and your attorney will need to review your household expenses to further investigate whether or not you are qualified to file Chapter 7.
To calculate your deductions from income, the court follows the Standards of the Internal Revenue Service. The national standards for food, clothing and other items as well as healthcare are combined with local standards such as housing, utilities, transportation, taxes, payroll deductions, term life insurance, court-ordered payments, some education, childcare, healthcare, telecommunications, etc.
Your income and deductions are multiplied to show a five-year projection. If it appears that your income does not exceed your expenses by about $6500 (for a five year period), then you may file Chapter 7. If your income exceeds your expenses by more than $10,950 (over five years), then you may not file Chapter 7.
As you can see, it is really important that you review the details of the form with a qualified attorney. He or she will be able to help you remember where every penny you earn is spent. Your attorney will help you make sure you are exhausting your options so that you can make an informed decision about filing.
If you do not qualify for Chapter 7, don’t feel discouraged. It may be an indication that reorganizing your debt under Chapter 13 is a better option.
About Reed Allmand
Allmand's vision is rooted in his own financially precarious childhood in Abilene "My father always had difficulty holding a job and supporting our family, so after my parents divorced when I was 12, my sister and I got jobs to help make ends meet," he recalls. "I remember what it felt like as a child to worry that our car would be repossessed or home foreclosed on."
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