What is the bankruptcy means test?

Among its other changes, BAPCPA enacted a means test to make it more difficult for those financially distressed individuals whose debts were primarily from consumer spending. For a person to file Chapter 7, he or she must complete a worksheet that compares his or her monthly income to the median income and household size in his or her state. If the median monthly income is below the median, he can proceed with the Chapter 7. If it is above, he or she can deduct allowable expenses based on an IRS formula. After the deduction, he or she multiplies the remaining amount by 60 "to determine how much disposable income" he or she has over the next five years. If this number is less than $6,000, the petitioner has passed the means test. If it is above $10,000, there is a presumption of fraud, and the individual can file for Chapter 7 "only with a showing of special circumstances." If it is between $6,000 and $10,000, additional calculations are required to make certain that there is no fraud.