Warning

Info

Warning

Info

Warning

Info

LSDefine

Simple English definitions for legal terms

Means Test

Read a random definition: progressive tax

A quick definition of Means Test:

The means test is a way to determine if someone is eligible for Chapter 7 bankruptcy. It looks at the person's income and expenses to see if they can afford to pay their debts. If their income is below the median income in their state, they automatically pass the test. If their income is above the median, they have to go through a second step that looks at their expenses. Depending on the results, they may only be eligible for Chapter 13 bankruptcy instead of Chapter 7. The purpose of the means test is to prevent people from abusing the bankruptcy system and to ensure that those who truly need help get it.

A more thorough explanation:

The means test is a formula used in bankruptcy law to determine if a person is eligible for Chapter 7 bankruptcy. This test is used to prevent people from abusing the bankruptcy system by filing for Chapter 7 bankruptcy when they could afford to pay some of their debts. The test mainly checks the debtor's ability to pay their creditors.

The means test has two steps:

  1. Is the debtor's current monthly income more than the median income in their state?
  2. If the answer to step 1 is yes, the debtor must reduce their current monthly income by expenses and multiply the difference by 60 months. If the resulting amount is:
    • More than or equal to $12,850,000, the debtor falls automatically under Chapter 13 bankruptcy.
    • More than 25% of the unsecured debt, the debtor falls automatically under Chapter 13 bankruptcy.
    • Less than or equal to 25% of the unsecured debt, the debtor can choose either Chapter 7 or Chapter 13 bankruptcy.
    • Less than or equal to $7,700,000, the debtor can choose either Chapter 7 or Chapter 13 bankruptcy.

To pass step 2 of the means test, the debtor must record their expenses, including food, clothing, housing, utilities, and transportation. Some expense deductions can be increased if the debtor can show that they are actual, reasonable, and necessary expenses.

Let's say John lives in California and wants to file for Chapter 7 bankruptcy. The median income in California is $75,277. John's current monthly income is $8,000. Since John's income is higher than the median income in California, he must move on to step 2 of the means test.

John records his expenses and finds that his monthly expenses total $6,000. He subtracts his expenses from his income, which leaves him with $2,000. He multiplies $2,000 by 60 months, which equals $120,000. Since $120,000 is more than $12,850,000, John is not eligible for Chapter 7 bankruptcy and must file for Chapter 13 bankruptcy instead.

This example illustrates how the means test works and how it determines a person's eligibility for Chapter 7 bankruptcy.

MDL | Mechanic's Lien

Warning

Info

General

General chat about the legal profession.
main_chatroom
👍 Chat vibe: 0 👎
Help us make LSD better!
Tell us what's important to you
TGM
18:41
not sure if I should email them to say that, or just hold off on sending it and not give an excuse
18:41
I think I just wouldn’t reach out and if they ask for them then say that
Dkk
18:41
@tgm Yeah sounds good, say that if they ask
18:47
hey yall
18:47
im premed idk why im here
18:48
we’re like cool and sexy and fun I get it
18:48
true i love ur user
18:49
thank you my little crow friend
Dkk
18:50
Med law easy done
medicine is a scam
join the ethically ambiguous legal field instead
Dkk
18:57
I want to meet an attorney that defends clients who run into flat earth problems. I want an attorney that knows and believes in flat earth theory.
19:05
i want a flat earther for president. i want a guy who posts on 4chan for president. i want someone who mogs for president.
Dkk
19:18
Exactly. My version of that awful poem.
Dkk
19:19
I can accept a president with maybe one or two of the poems traits hut good God, all of them??? No ty.
windyMagician
19:20
president who respects sex is crazy
windyMagician
19:20
we had bill clinton already
Dkk
19:21
Bill Clinton, first and last black president
windyMagician
19:23
I want to go running but my leg feels weird
windyMagician
19:23
it doesn't hurt its just tingly
Dkk
19:26
It needs more alcohol. You tingle when your nerves need watering.
19:27
try stretching it maybe to see what's up
windyMagician
19:27
stretches make me think it's just soreness
windyMagician
19:27
I'm sober lol
Dkk
19:38
Anyone else get the google notification that your LSD password has been compromised lol. LSD got hacked.
20:48
what.jpg @Dkk
CynicalOops
21:03
You think you just fell out of a coconut tree?
jackfrost11770
21:10
nope dk
LSD+ is ad-free, with DMs, discounts, case briefs & more.