Of the two kinds of bankruptcy commonly filed by individuals, Chapter 13 is the one that doesn’t repossess assets of the person, but instead allows the debtor to make payments over several years. Before the bankruptcy court gives its approval for a Chapter 13 bankruptcy, it applies a “means test”. The purpose of the test is to see if the debtor has enough disposable income coming in to make the payments under the Chapter 13 plan. If the answer is no, there isn’t enough income for a Chapter 13 repayment plan, then the debtor will need to file bankruptcy under Chapter 7. (That’s the one where you have to give up some property so it can be sold to satisfy some of the debts, with other debts being forgiven altogether.)

The first thing about the Indiana Bankruptcy Court means test is, the court looks at your monthly income during the previous six months, to see if it’s above or below the median income for a household the size of yours in Indiana. Congress has set out special definitions of “disposable income”, “current monthly income”, “expenses”, etc., so the means test is not a do-it-yourself process. There are a lot of different factors to consider and many details to know about how to fill out the forms. That’s a big part of the work I do as a bankruptcy attorney in Indiana.

What the means tests really means is that it determines whether or not the court will allow you keep your property by entering into a Chapter 13 repayment plan.