The means test is used to determine who is eligible for Chapter 7 Bankruptcy. It applies to people whose debt is primarily consumer debt. If you have more than 50% business debt or tax debt, the means test does not apply to you. There are other exceptions to the means test like majority of the debt was incurred during active military duty. The means test is a comparison between your and your spouse average income over the past 6 months, annualized, and the median income for household of similar size of your state of residence.
If your income is less than the median income, then you pass the means test. If your income is above the median, you must complete the rest of the means test using a combination of actual and standardized expenses. At the end of the calculation, if you are left with insufficient disposable income, deemed by Congress, that is too low to pay back your debt, then you pass the means test.
However, if you are left with a sufficient disposable income, deemed by Congress, that is meaningful to pay back your debt, then there is a presumption of abuse in Chapter 7 Bankruptcy filing. You might be able to rebut the presumption of abuse by specifying "special circumstances", for example, you are now unemployed and do not have the income to repay your debt as suggested by the means test.
If you cannot rebut the presumption of abuse, you can still file for bankruptcy using Chapter 13 Bankruptcy. This means that Chapter 7 Bankruptcy is not available to you right now. However, if your income or expenses change, you might qualify for Chapter 7 Bankruptcy later.
Because the means test is very complicated and can be unintuitive, it is not a do-it-yourself project. You should contact an experienced Sacramento Bankruptcy Attorney to determine if you qualify for Chapter 7 Bankruptcy and if so, is filing for Chapter 7 Bankruptcy in your best interest. If you file for Chapter 7 Bankruptcy, will you lose your house or other properties to the Chapter 7 Bankruptcy Trustee who will sell them to repay your creditors? If you do not qualify for Chapter 7 Bankruptcy, should you file for Chapter 13 Bankruptcy?