How does the Chapter 7 means test work in California?

The means test of 11 U.S.C. § 707(b) compares a household's average monthly income over the six months before filing to the California median for that household size. Below the median, the test is passed. Above it, allowed expenses determine whether enough disposable income remains to presume Chapter 7 abusive.

The test starts with current monthly income: the average of nearly all income received in the six full months before filing, with limited exclusions such as Social Security benefits, annualized and compared to the published California median for the household size, figures adjusted periodically. Below-median filers pass and complete nothing further. Above-median filers itemize allowed deductions (IRS standard allowances for living expenses, actual secured debt and support payments), and if the remaining monthly disposable income exceeds statutory triggers, a presumption of abuse arises, pointing the case toward dismissal or conversion to Chapter 13 unless rebutted by documented special circumstances (11 U.S.C. § 707(b)(2)(B)). Two structural outs: the means test applies only when debts are primarily consumer debts, so business-debt filers bypass it, and certain disabled veterans are excluded. Timing matters because the six-month average is a moving window, after a job loss, each passing month lowers the figure. Filers who cannot pass still have Chapter 13, paying disposable income through a three-to-five-year plan.

Authority: 11 U.S.C. § 707(b)