The means test was created to prevent debtors from abusing the bankruptcy system. Although bankruptcy is a public right, the legislature does not want people filing for bankruptcy that truly does not need to. Bankruptcy is meant to give a fresh start to those who cannot and will not be able to pay their debts, not to help fraudsters avoid creditors, or to make it easier for people who really have the ability to pay off their debts.

Before the means test was created, bankruptcy filings were left to the discretion of the judge.  The judge would grant the bankruptcy if he or she felt the debtor was sincerely unable to pay their debts.  The judge would deny the bankruptcy if he or she felt that the debtor was able to pay their debts.  In New York, the law ensures that the right people file for bankruptcy by requiring the debtor to take the means test.

The test enables attorneys to view the financial situation of a debtor and determine whether or not the debtor will be able to file for bankruptcy before the debtor begins the legal process.  Thus, the debtor does not have to waste time going through the legal proceeding if they seek a qualified professional who can advise them on whether they meet the means test.

As of May 1, 2012, a debtor’s household income for the preceding six months is compared with the median income for a similar size family in New York.

Median incomes for New York are as follows: Family of 1: $47,381, Family of 2: $57,884, Family of 3: $69,066, and Family of 4: $83,775.

If the debtor’s average monthly income is less that the mean income for a similar size family in New York, the debtor is presumed eligible to file for Chapter 7 bankruptcy, which enables a debtor to have debt discharged, as opposed to creating a repayment plan under Chapter 13 bankruptcy.

It is possible to avoid the means test.  Debtors who make less than a certain amount of income are generally exempt from the means test because they generally do not make enough money to abuse the bankruptcy system.

If you are considering filing for bankruptcy, consult a qualified bankruptcy attorney in New York who can properly advise you on whether you would pass the means test to successfully file for bankruptcy.