The Means-Test Step One - What is Your Income?
The "Current Monthly Income" is a monthly average of all your income over the past six months. For example, if you live by yourself and make $1,900.00 per month gross income, and the median income for someone in your state living alone is $3,000.00 per month gross, then you pass the means test, and you are below the median income therefore, you qualify to file a chapter 7. If your income is above the median, then you have to move on to Step Two:
The Means Test Step Two - Deduct Allowable Expenses
Step Two: If you are above the median income you take "Current Monthly Income" from Step One, and then subtract your monthly expenses. However, some monthly expenses are already in the formula for you. For example, if you live in Shreveport, the government already says what "reasonable" household expenses should be for a person living in Shreveport. Once you have deduced all the allowable expenses, you see if there is money left over to pay to unsecured creditors. If there is money left over, your Chapter 13 might have to be .........