The Florida Means Test for Chapter 7 Bankruptcy

The means test is the income-based qualification screen for Chapter 7 bankruptcy. Congress added it in the 2005 BAPCPA amendments to push higher-income filers into Chapter 13 repayment plans. For most Miami filers, the means test is a procedural check rather than an obstacle – if your household income is at or below the Florida median for your household size, you pass the means test automatically.

Step One: The Current Monthly Income Calculation

"Current monthly income" (CMI) is the average of all the household's gross income from all sources over the six full calendar months immediately preceding the filing month. It includes:

• Wages, salary, tips, commissions, bonuses
• Net income from operating a business (gross revenue minus ordinary and necessary business expenses)
• Rental income (net)
• Interest, dividends, and royalties
• Pension and retirement income
• Unemployment compensation (with some courts treating it as excluded)
• Regular contributions to household expenses by non-filing spouses, family members, or others

Social Security retirement and disability benefits are excluded from current monthly income by statute. So are most damages received on account of war crimes, terrorism, or international war.

The six-month average is annualized (multiplied by 12) to produce an annualized income figure compared against the Florida median.

Step Two: Comparison to the Florida Median Income

The Census Bureau publishes annual median family-income figures by state and household size. The U.S. Trustee Program then publishes adjusted figures used for bankruptcy purposes. As of recent figures, the Florida medians are approximately (subject to update):

• 1-person household: ~$58,000
• 2-person household: ~$74,000
• 3-person household: ~$84,000
• 4-person household: ~$98,000
• Each additional household member: add ~$9,900

Current figures are published on the U.S. Trustee Program website. If your annualized CMI is at or below the median for your household size, you pass the means test and are presumed to qualify for Chapter 7. The case proceeds normally.

Step Three: The Second-Part Means Test (Above-Median Filers)

If income is above the Florida median, the analysis continues. The debtor completes Form 122A-2, which subtracts a long list of allowed expenses from CMI to determine "monthly disposable income." Expense categories include:

• IRS national and local standards for food, clothing, personal care, housekeeping supplies, transportation, housing and utilities (varying by county)
• Actual expenses for certain items: taxes (income, payroll, real-property), term life insurance, court-ordered payments, child care, education for dependent children, health insurance, telecom, secured-debt payments
• Priority debts being paid in installments
• Administrative expenses of a hypothetical Chapter 13 case

The result is "monthly disposable income," which is multiplied by 60 to produce "60-month disposable income."

The presumption of abuse arises if 60-month disposable income exceeds:

• $15,150 (the upper threshold, adjusted periodically); or
• $9,075 AND at least 25% of non-priority unsecured debt

If the presumption arises, Chapter 7 is presumptively unavailable absent special circumstances. The debtor's options are typically to file Chapter 13 instead or to demonstrate special circumstances (extraordinary medical expenses, lost income, etc.) sufficient to rebut the presumption.

"Special Circumstances" Rebuttal

Section 707(b)(2)(B) of the Bankruptcy Code allows above-median filers to rebut the presumption of abuse by showing special circumstances – for example, a recent serious illness, a job loss after the six-month lookback period, military deployment, or other facts that materially change the debtor's actual financial picture. The rebuttal must be supported by documentation and is decided on a case-by-case basis.

Section 707(b)(3) Totality of the Circumstances

Even passing the mathematical means test does not guarantee Chapter 7 will be available. The U.S. Trustee can move to dismiss for "abuse" under the totality of the circumstances if the debtor's actual financial situation shows ability to pay a meaningful portion of unsecured debt. This rarely arises for clients with genuinely difficult finances.

Practical Implications

• Self-employed filers should pay close attention to the six-month income lookback – timing the filing around a low-income period (without manipulation) often makes the difference.
• Recently unemployed filers are sometimes better off waiting a few months until the six-month average reflects the new reality.
• Households with a non-filing spouse must include the non-filing spouse's income for CMI purposes (with limited adjustments for portions not used for household expenses).
• Multiple income earners and Social Security recipients often face complicated calculations that reward careful preparation.

Form 122A and the Mechanics of the Calculation

The means test is performed on Official Form 122A – Form 122A-1 for all individual Chapter 7 filers, and Form 122A-2 if the debtor's CMI exceeds the applicable median. (Form 122A-1Supp is used to claim certain exclusions, such as the disabled-veteran or reservist exclusion under § 707(b)(2)(D).) The form is filed with the petition and is sworn under penalty of perjury. Errors in the form are taken seriously by the U.S. Trustee's office for the Southern District of Florida, which routinely reviews above-median cases and is not shy about filing motions to dismiss when the numbers do not add up.

The median income figures used on the form are not static. The U.S. Trustee Program publishes the Florida median income figures, which the U.S. Trustee updates approximately twice a year based on Census data. The figures applicable on the filing date control the case. A case filed one day before an updated figure takes effect is governed by the prior figure even if the new figure would produce a different result. Watching the publication calendar is sometimes part of timing a filing.

IRS Standards in More Depth

The above-median analysis on Form 122A-2 borrows heavily from the IRS Collection Financial Standards. The standards are organized into three categories:

• National Standards – food, clothing, household supplies, personal care, and miscellaneous expenses, allowed at a flat per-household-size amount regardless of where the debtor lives.
• Local Standards – housing and utilities, allowed at a county-specific amount (Miami-Dade, Broward, and Palm Beach each have their own numbers), and transportation, which has both an "ownership cost" component and an "operating cost" component varying by region.
• Other Necessary Expenses – taxes, mandatory payroll deductions, term life insurance for the debtor, court-ordered support, education for employment or for a disabled child, childcare, telecom, and health insurance.

The form also allows deduction of actual monthly payments on secured debts (averaged over 60 months from the filing date) and certain priority debts. A debtor with a high mortgage payment and a substantial car loan can often pass the second-part means test even with income well above the median, because the secured-debt deductions are unlimited so long as the debt is contractually owed.

Special Circumstances Under Section 707(b)(2)(B)

If the presumption of abuse arises, the debtor may rebut it by demonstrating "special circumstances" that justify additional expense allowances or a downward adjustment to CMI. The statute requires the debtor to itemize each additional expense, document each item, attest under oath, and show that there is no reasonable alternative. Examples from our practice and from reported cases include:

• Catastrophic medical expenses not covered by insurance that recur each month
• A job loss after the six-month lookback window that has materially reduced ongoing income
• A military call-up that lowered a reservist's civilian income
• Court-ordered restitution or fines not otherwise reflected on the form
• Necessary travel to care for an elderly parent or disabled child

Special circumstances are decided case by case. Documentation is everything. A bare assertion will not move the U.S. Trustee.

The Non-Consumer Debt Exclusion

Section 707(b) applies only to a debtor "whose debts are primarily consumer debts." If more than half of the debtor's total debt by dollar amount is non-consumer (business debt, tort liability, tax debt with a non-consumer purpose, etc.), the means test does not apply at all and the case proceeds in Chapter 7 without the income screen. This is a critical exit for failed-business filers with personally guaranteed commercial obligations – even high-income filers can use Chapter 7 if the debts are primarily business in nature. See our business bankruptcy page.

The classification is by dollar amount, not by number of creditors. A debtor with $300,000 in personally guaranteed commercial debt and $50,000 in credit cards qualifies for the exclusion even though most of the individual accounts are consumer.

Disabled Veteran and Reservist Exclusions

Disabled veterans whose indebtedness occurred primarily during active duty or while performing a homeland defense activity are excluded from the means test under § 707(b)(2)(D). Reservists and National Guard members called to active duty for at least 90 days receive a temporary exclusion that runs while on active duty plus 540 days after release. These provisions are underused. Veteran clients should always be asked about active-duty status during the relevant periods.

Chapter 13 Disposable Income and Lanning v. Hamilton

For above-median Chapter 13 filers, the same Form 122 calculation drives the "projected disposable income" that must be paid into the plan under § 1325(b). The Supreme Court's decision in Hamilton v. Lanning, 560 U.S. 505 (2010), confirmed that courts may depart from the mechanical calculation when known or virtually certain changes in income or expenses make the historical figure unrepresentative. A debtor who has lost a major source of income, or who will soon retire, can plan around a high six-month average if the change is documented and likely. This is one of several areas where Chapter 13 plan length and payment amount turn on the means-test outputs even though the test was designed for Chapter 7 screening.

Coordination With Exemptions and Filing Strategy

The means test does not determine which property the debtor keeps – that is the function of the Florida exemptions. But the two work together. A debtor who fails the means test and must file Chapter 13 should also evaluate whether the available exemptions, especially the homestead exemption, make a Chapter 7 result feasible if a non-consumer-debt or disabled-veteran exclusion applies. The full filing strategy is built from both the means test output and the exemption analysis together.

Schedule a Consultation

The means test is straightforward when income is clearly below or clearly above the median, and more strategic in the middle range. Call 786-522-1411 or email [email protected] to run the means test on your numbers.