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The Means Test in Plain Language
The new bankruptcy law, among other things,
introduces a means test as a determinant of
qualification to debts discharged.
If you pass the means test, it is presumed
that your bankruptcy is not abusive but if
you fail the means test, it is presumed that
your bankruptcy is abusive.
The name of the legislation is, "Bankruptcy Abuse Prevention and Consumer
Protection Act", hence the acronym, BAPCPA.
Unfortunately, the last thing it does is
protect the consumer. Instead, it protects
the profits of the credit card companies.
Until the law is fixed, you have to
comply with its provisions, and central to
these is the means test.
The means test produces one of two results.
The first is the statement, "presumption
arises" and the other is the statement,
"presumption does not arise." The first
statement means that your bankruptcy
filing is presumed abusive and the second
means that it is not.
Passing the means test and consequently,
earning the presumption that abuse does not
exist, is essentially a green light
indicating that you will be granted a
discharge. If you do not pass the means test
but decide to file anyway, you could still
get your debts discharged, but it would be
only after a hearing. The judge could decide that your
bankruptcy is not abusive despite the
initial presumption of abuse.
Elements of the means test
The means test provides three benchmarks,
the passing of any one of which
is satisfactory. In other words, you need to
meet only one of three criteria.
The first criterion compares your income to
the median income for your area. If you meet
this criterion, you pass the test and need
not complete the rest.
If you do not meet the median income
criterion, your income is adjusted to
reflect allowable deductions in various
categories of expense. These expense
deductions are taken from published data
compiled by the IRS, the Census Bureau and
from various Federal agencies. They are
quite detailed and are broken down by
county, metropolitan areas, census regions,
family size, income, number of vehicles and
various other metrics.
After applying these allowable deductions,
your disposable income cannot exceed $100
per month. If your disposable income does
not exceeds this amount, you pass the test as per the
adjusted income criterion. If your
disposable income exceeds $160 per month,
you fail the means test and the road ends
there for you. If your disposable income
falls between $100 and $160 per month, you
continue to the third and final
determination.
The third and final criterion makes
a determination as to your ability to pay
your unsecured debts in a five year period.
If you meet this criterion, you pass the
means test but if you do not, you
fail the test and your bankruptcy can be
presumed abusive.
Why you need this means test
For the as little as the cost of a Big Mac and fries, you
could go from passing the test to failing it. An excess
income of $100 per month is a
little more than $3.35 per day and that is
not much. Comparing $100 to $160 per month,
the difference between passing and failing
the test, it is less
than the price of a coffee drink or a large
soda at your favorite eatery.
This is why you need a professional means
test such as we provide and this is why you
need a full service bankruptcy company
preparing the documents.
The means test is austere and the
calculations too numerous and detailed to be
done by hand but that does not mean that one
computer performed means test is as good as
the other. It is like saying that one tax
preparer is the same as the next. On the
contrary, if you are on the borderline, it
make a difference how the test and the necessary
documentation are done.
This wiggle room in the means test is due to
the fact that like taxes, there are
exceptions and loopholes. The very fact that
it relies on IRS data and uses such tax
vernacular as deductions and household size
should be a tip off that like taxes, the
skill of the preparer and the quality of the
test makes a significant difference.
Our means test is robust and takes advantage
of every possible allowable deduction,
exception and loophole. Because we also
prepare bankruptcy petitions, when you hire
us for the bankruptcy filing as well as
for the means test, you get the best
possible opportunity to have your bankruptcy
approved.
Testing services
We offer several levels of means testing.
Select the level that is right for you. If
your attorney or preparer has told you which
level to select, then order it. If you need
to learn more about each level, the click
the appropriate link.
Not only do we do means
testing, we prepare bankruptcy documents too
and we work with many other bankruptcy sites
that use our means testing.
After taking our means test,
you can have us prepare the bankruptcy forms
for you or you can visit some of the other
bankruptcy sites that also prepare
bankruptcy filings.
MT-100 is a light weight means test designed to
give you a rough idea where you stand. Do not rely solely on this to
determine if you qualify to have your debts discharged. It asks fewer questions and makes fewer calculations
and can be completed in as little as 3 minutes. If you need to know for sure
that you qualify as per the official BAPCPA means test, use the other means
test options. Includes: limit one run per email address. Price: Free
MT-200 is a full BAPCPA means test. If you pass
it, you qualify to have your debts discharged. It asks all the questions and makes
all the calculations required by the official rules. It is fully accurate at
all income levels. The test can be performed in about 15 to 20 minutes. At
the end of the test, you are issued a printable certificate that you can
present to your attorney or preparer. Includes: 5 re-tests. Price: $29
MT-300 is a full BAPCPA means test. If you pass
it, you qualify to have your debts discharged. It is fully accurate at
all income levels. The test can be performed in about 15 to 20 minutes. At
the end of the test, you are issued a printable certificate as well as the
complete 6 page court-ready form 22(a) which you can file with the rest of
your bankruptcy documents. This is ideal if you are preparing your
bankruptcy documents by yourself and need help only with the means test form
22(a). Includes: 10 re-tests. Price: $89
MT-400 is for those who want us to perform the
means test as well as prepare all of their court-ready bankruptcy forms. The
MT-400 includes the full BAPCPA means test and is made a part of our
bankruptcy intake questionnaire. When we are done preparing all of your
documents, you will have everything that you will need to file a chapter 7
bankruptcy. All you need to do is sign your name and file. Includes
unlimited retests until you are done supplying us your information.
Price: $189
Our corporate affiliates include many of the
top bankruptcy web sites as well as
attorneys who direct their potential clients
to us rather than expend valuable funds and
resources not knowing if they will qualify.
For Attorneys
We invite attorneys and bankruptcy preparers
to use our means test resources to
pre-screen their clients. Our MT-300 is
ideally suited for client pre-screening
since it is a full BAPCPA means tester and
since it produces a certificate that the
client can bring to their attorney
consultation.
For Debtors
If you are a debtor seeking to file
bankruptcy and do not have an attorney, you
will want to run a means test using our test
facilities before continuing. The new law
places strict restrictions on the conduct of
bankruptcy lawyers and as a result, many
lawyers are selective as to who they will
represent. For one thing, commercial BAPCPA
support firms charge attorneys upwards of
$250 for means testing and due diligence,
per client and that fee gets passed on to
the debtor.
Preparing your bankruptcy without an
attorney makes sense only if you will be
using the services of a full service
preparation company, especially one that has
licensed a commercial version of our means
tester. If you do not already have a
bankruptcy preparer, you may want to select
one from our list of recommended providers
in the resource link section below.
Recommended Resource
What is it like to attend the 341(a)
Meeting of Creditors?
This link provides testimony of actual debtors in their own words. The
information they share can be very useful if you have never been through the
process yourself. Debtor
Experiences at the 41(a) Meeting of Creditors
Review of Bankruptcy Web Sites
This web site reviews bankruptcy help web sites and has useful articles on
the process. Vendorhound Reviews
What Are The Steps Required Under The New Laws?
This web site outlines the step by step
requirement of filing under the new laws. This is a bankruptcy provider that
offers means test discounts, and their info on the process is accurate, however
we do not endorse any other companies other than ours.
Step-by-Step Under New Law
Bankruptcy Law Reference For Consumers
This link is probably the best source of general consumer bankruptcy laws
written in easy to understand layman terms.
Consumer Bankruptcy Library
Bankruptcy Law Reference For Attorneys
This is the premier link for bankruptcy laws designed for attorneys and legal
professionals.
Cornell Law Library
Companies Offering Discounts for Taking The Means Test
This is a partial list of web sites that will give you a discount off their
price if you have taken our means tests. We only list companies that have
demonstrated their ability to produce documents the fully comply with the
BAPCPA. Linking to these providers is not an endorsement of their services. If
you are a bankruptcy preparer and wish to gain XML validation of our means test
certificates, contact us for further instructions. As a minimum, we will need to
verify that your documents include properly prepared Form 22a that is fully
compliant with the means test requirements of the BAPCPA.
ZMT is a BAPCPA means testing facility suitable for client
screening. If you are an attorney, encourage your clients to
take our MT-200 means test before retaining your services.
It will save you time and money by ensuring that you handle
only qualified clients.
As the premiere provider of
consumer means testing in all 50 states, ZMT is a perfect
fit for thousands of bankruptcy lawyers nationwide. There is
no signing up required of you. Simply link to our site or
direct your prospective clients to get tested by us before
retaining your services.
We issue certificates to debtors who have passed our
MT-200 test which they can present to you as evidence of
qualification.
