Debtors who file bankruptcy after October 2005 must undergo a Means Test analysis. Essentially, that is a two part test. The first half of the Means Test makes an inquiry into your “Current Monthly Income.” Current Monthly Income (CMI) is actually a term of art. It is not necessarily what your current income is at the instant time. CMI is the average of what your gross monthly income has been over the 6 months prior to the month in which you file the bankruptcy.
You then compare your CMI with what the IRS’s guidelines indicate that most families of your size earn in the state in which you live. Most debtors in Collin County do not pass the first part of the Means Test because most people make more around our area than other families do in Texas.
However, most of our clients pass the second part of the Means Test. The second half of the Means Test compares your housing, utility, transportation and other necessary expenses to what the IRS’s guidelines indicate are normal for a family of your size in the county in which you live. Most of our clients pass the second half of the Means Test so that they are not required to pay any of their credit card debt in a Chapter 13 and most of the time they qualify for a Chapter 7.