When you file for Chapter 7 bankruptcy, you must complete several forms that determine if you pass the bankruptcy "means test." In the first of these, Form 22A-1 – Statement of Your Current Monthly Income, you determine if your income is above or below the median income for similar households in your state. If it is below the median, you are qualified to file a Chapter 7 bankruptcy. If it is above, you must complete Form 22A-2 and take the “means test” to determine whether you have enough income to repay your creditors some, or all, of what you owe them. If you do, then you don’t qualify for Chapter 7 bankruptcy, and, unless you are exempt from the means test, you must file for Chapter 13 instead.
(To learn about the other forms you must file, see Completing the Bankruptcy Forms.)
The Means Test
While a Chapter 7 bankruptcy allows you to discharge all qualified debts within a matter of months, it is not available to everyone. If you have money left over each month after paying basic living expenses, you cannot file for Chapter 7 and must file for Chapter 13 bankruptcy instead. In Chapter 13 you make monthly payments to your creditors for three to five years. The purpose of the means test is to determine whether you can afford a Chapter 13 payment plan. (Get details on the Chapter 7 means test.)
The Means Test Forms
You take the means test by completing a series of three forms – though you may not need to fill them all out. After you complete the first one, the form tells you whether you must complete additional forms.
Here is an explanation of each of the forms:
Form 22A-1. The first form of the means test, Form 22A-1, determines whether your income is below the median income for your state. If it is, you qualify for a Chapter 7 bankruptcy and do not need to fill out the other two forms. Continue reading below to find out more about filling out Form 22A-1.
Form 22A-1 Supp. You fill out Form 22A-1 Supp to determine whether you are exempt from the means test. You may be exempt if most of your debts are business debts or if you have recent military service. If you are exempt -- meaning that the means test does not apply to you -- then you do not need to fill out most of Form 22A-1, and you do not need to fill out Form 22A-2 at all. This is especially helpful if your income is above the median for your state. (To learn more, see Completing the Chapter 7 Bankruptcy Means Test Form 22A-1 Supp.)
Form 22A-2. If you aren’t exempt and your income is above the state median, you fill out the final form, Form 22A-2. It is the final step determining whether you have funds to pay your creditors. If you don’t, you can file a Chapter 7 bankruptcy. If you do, you must file a Chapter 13 bankruptcy instead. (To learn more, see Completing the Chapter 7 Bankruptcy Means Test Form 22A-2.)
How to Get Form 22A-1
You can find the most recent version of Form 22A-1 on the U.S. Court’s website at www.uscourts.gov. Keep reading for a general discussion of the information required in each section of the form, and the reason you must provide this information. For in-depth information on completing this form, consult with a good self-help book or a bankruptcy lawyer.
Part 1. Calculate Your Monthly Income
In the first part of Form 22A-1, you provide the court with information about your marital status, filing status, and all sources and amounts of your income.
Marital and Filing Status
On the first line of Part I, you check the box that best describes you. Your answer to this question determines whose income must be reported in Part 2.
If you are single. You check the first box and only report your income in Part 2.
If you and your spouse file together. You check the second box and both of you report your income in Part 2.
If you are married but your spouse doesn’t file. In this situation, you may or may not have to include your spouse's income. To determine this, you start by checking the box that best describes your living and marital situation. The options are as follows:
- living in the same household and are not legally separated
- living separately or are legally separated
If you check the first option, you must report your spouse’s income. If you are living separately, or you are legally separated (which means you filed your state’s legal separation paperwork at the appropriate courthouse), you do not report your spouse’s income. It is important to understand that you check this box under penalty of perjury. This means that you should be prepared to prove your marital status because it is fraudulent to check this box without the right to do so.
Reporting All Income
On lines 2 through 10 of Part 1, you list all of your sources of income for the full six months before you file bankruptcy. For example, if you file for bankruptcy on August 15th, you include all income information for the period of February 1st through July 31st. The income figures you provide on 22A-1 may be different from the numbers you included on Schedule I, because that schedule asks for your current income, not your income over the prior six months. (To learn more, see "Current Monthly Income" for the Bankruptcy Means Test.)
You report all income other than income you receive under the Social Security Act (you'll list Social Security income on a separate line), including the following:
- gross wages, salary, tips, bonuses, overtime and commissions (before payroll deductions)
- alimony and maintenance payments
- regular payments you get for household expenses
- net income from operating a business, profession, or farm
- net income from rental and other real property
- interest, dividends, and royalties
- unemployment compensation
- pension or retirement income, and
- all income from other sources.
Be sure to state each amount as a monthly figure, regardless of how often you receive that income. On the last line of Part 1 (Line 11), you total the amounts in each column and add together the income of both spouses (if applicable), to come up with your total monthly income.
Part 2. Determine Whether the Means Test Applies to You
In the second section of Form 22A-1, you compare your annual income to that of the median income in your state for the same household size. To do that, you multiply the figure you came up with in Part 1 (your monthly income) by 12 months. This is your annual income. You then compare this to the median income in your state. You can find that figure on the U.S. Trustee’s website at www.justice.gov/ust (choose "Means Testing Information," choose the correct date from the drop down menu, and then choose "Median Family Income Based on State/Territory and Family Size".)
Less than the state median income. If your income is less than your state’s median income, you pass the means test without further calculations. On the top of the form, you check the first box, “There is no presumption of abuse.” Because your income is low enough, your Chapter 7 filing is not an abuse of the bankruptcy system. In this situation, you do not need to complete Form 22A-2.
More than the state median income. If your income is more than your state’s median income, you must do more calculations to see if you qualify for Chapter 7 bankruptcy. On the top of the form, you check the second box, “The calculation to determine if a presumption of abuse applies will be made under Chapter 7 Means Test Calculation (Official Form B 22A2).” You then complete Form 22A-2.
Part 3. Sign Below
By signing Form 22A-1, you declare under penalty of perjury that all information you provided is true and correct. The instructions at the bottom of the page tell you whether you must file Form 22A-2.
Means Test Exclusions
There are a few categories of bankruptcy filers that automatically qualify for Chapter 7 bankruptcy and don’t have to take the means test. This may be true for you if you fall within one of the exclusions:
- disabled veterans;
- filers whose debts are primarily business debts, and
- certain members of the armed forces reserves and the National Guard.
If you believe you qualify, complete Form 22A-1 Supp and follow the form’s instructions. (To learn more, see Completing the Chapter 7 Bankruptcy Means Test Form 22A-1 Supp.)
This article provides general information only. There are many legal issues involved and important decisions to be made when filing for bankruptcy. You must understand the entire bankruptcy process, learn about the applicable federal and state laws, and determine how those laws will affect your particular situation before you complete the bankruptcy forms. If you want to file bankruptcy without a lawyer, use a good do-it-yourself book like Nolo's How to File for Chapter 7 Bankruptcy to ensure you make well-informed decisions about your bankruptcy case.