Editing Means test (section)

==United States==
{{USBankruptcy}}

Means testing is used to test for eligibility to [[Medicaid]], [[Temporary Assistance for Needy Families]], [[Section 8 (housing)|Section 8 housing]], [[Supplemental Nutrition Assistance Program]], [[Pell Grant]], [[Federal Supplemental Educational Opportunity Grant]], [[Federal Work-Study Program]], direct subsidized student loans, as well as the eligibility for relief for debtors who have sufficient financial ''means'' to pay a portion of their debts.<ref>''Understanding Bankruptcy.'' Second Edition. Jeff Ferriell and Edward J. Janger. LexisNexis. 2007. p. 28.</ref> The means test is perhaps best recognized in the United States as the test used by courts to determine eligibility for [[Title 11 of the United States Code]] [[Chapter 7 bankruptcy|Chapter 7]] or [[Chapter 13 bankruptcy]].

During the [[Great Depression]] in the 1930s, the test was used to screen applicants for such programs as [[Home Relief]], and starting in the 1960s, for benefits such as those provided by Medicaid and the Food Stamp Program.

In 1992, third-party presidential candidate [[Ross Perot]] proposed that future [[Social Security (United States)|Social Security]] benefits be subjected to a means test;<ref>{{cite journal|last1=McSteen|first1=Martha|title=Fifty Years of Social Security|journal=Social Security Bulletin|year=1985|volume=48|issue=8|pages=36–44|url=http://www.ssa.gov/history/50mm2.html|publisher=Social Security Administration|pmid=3901340|access-date=9 September 2014|quote=It should be supplemented by effective private pensions, individual insurance, savings, and other investments; and it should be undergirded by effective means-tested programs.}}</ref> though this was hailed by some as a potential solution to a purported impending crisis in funding the program, few other political candidates since Perot have publicly made the same suggestion, which would require costly investigations and might associate accepting those benefits with [[social stigma]].

In 2005, the US substantially changed its [[Bankruptcy in the United States|bankruptcy laws]], adding a means test to prevent wealthy debtors from filing for Chapter 7 Bankruptcy. The most noteworthy change brought by the [[Bankruptcy Abuse Prevention and Consumer Protection Act|2005 BAPCPA amendments]] occurred within {{usc|11|707(b)}}. The amendments effectively subject most debtors who make an income, as calculated by the Code, above the median income of the debtor's state to an income-based test.<ref name="CSM"/> This is referred to as the "means test". The means test provides for a finding of abuse if the debtor's income is higher than a specified portion of their debts. If a presumption of abuse is found under the means test, it may be rebutted only in the case of "special circumstances".<ref>[http://www.bknevada.com/index.php/chapter-7-liquidation/subchapter-i-officers-and-administration/707-dismissal-of-a-case-or-conversion-to-a-case-under-chapter-11-or-13 11 U.S.C. § 707(b)(2)(B)]</ref>

Debtors whose income is below the state's median income are not subject to the means test. The Code-calculated income may be higher or lower than the debtor's actual income at the time of filing for bankruptcy. This has led some commentators to refer to the bankruptcy code's "current monthly income" as "presumed income".  If the debtor's debt is not primarily [[consumer debt]], then the means test is inapplicable.

Thus, the means test is a formula designed to keep filers with higher incomes from filing for Chapter 7 bankruptcy. These filers may use Chapter 13 bankruptcy to repay a portion of their debts, but may not use Chapter 7 to wipe out their debts altogether.<ref name="CSM">{{cite news|last1=Pyles|first1=Sean|title=Why the bankruptcy means test matters|url=https://www.csmonitor.com/Business/Saving-Money/2016/0718/Why-the-bankruptcy-means-test-matters|access-date=16 December 2017|publisher=Christian Science Monitor|date=18 July 2016}}</ref> The bankruptcy means test is complex and the terms that govern many parts of it – including those terms that control whether it applies at all – are of unsettled definition.<ref>[http://www.abanet.org/media/youraba/200901/article08.html Abanet.org]</ref>