The means test is used to determine if a bankruptcy filer can qualify to file a Chapter 7 (liquidation) bankruptcy. The test involves a mathematical calculation based on a bankruptcy filer's current monthly income, family size, and the median income of the filer's state of residence. Under the means test, those who earn less than the median income for a family of their size in their state are allowed to file under Chapter 7. Those who earn more and can afford to pay back at least $100 a month (subtracting allowable expenses as determined by the IRS) will generally have to file under Chapter 13. Chapter 13 filing involves submitting to a restrictive five-year debt repayment plan.
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