CBS CBS Consumer Bankruptcy & Debtor Education 2

Question 1

What is the 'means test' introduced by BAPCPA for consumer Chapter 7 cases?

Accepted Answer

A statutory calculation using income and allowed-expense data to determine whether a debtor qualifies for Chapter 7 relief

Answer

The means test under 11 U.S.C. § 707(b)(2) compares the debtor's current monthly income to the state median and, if above it, applies IRS-standard expense deductions to determine disposable income available for creditor repayment.

Question 2

If a consumer debtor's current monthly income exceeds the applicable state median income, what is the next step in the means test?

Accepted Answer

The debtor must complete the full means test calculation using allowed expense deductions to determine monthly disposable income

Answer

Exceeding the median income triggers Part 2 of the means test, where the debtor subtracts IRS-standard and actual allowed expenses; only if disposable income still exceeds thresholds does a presumption of abuse arise.

Question 3

How is 'current monthly income' (CMI) defined for purposes of the Chapter 7 means test?

Accepted Answer

The average monthly income from all sources received during the 6-month period ending on the last day of the calendar month before filing

Answer

Under 11 U.S.C. § 101(10A), CMI is the average monthly income received from all sources during the 6-calendar-month lookback period immediately preceding the filing, with certain exceptions.

Question 4

Which of the following income sources is EXCLUDED from 'current monthly income' in the bankruptcy means test?

Accepted Answer

Social Security Act benefit payments

Answer

Social Security Act payments are specifically excluded from the CMI definition under 11 U.S.C. § 101(10A)(B), ensuring Social Security income does not affect Chapter 7 eligibility.

Question 5

What is a 'presumption of abuse' in a consumer Chapter 7 case and what does it trigger?

Accepted Answer

A statutory finding that arises when disposable income exceeds set thresholds, which may lead to dismissal or conversion to Chapter 13

Answer

Under 11 U.S.C. § 707(b)(2), a presumption of abuse arises when monthly disposable income multiplied by 60 months exceeds certain statutory thresholds, shifting the burden to the debtor to rebut or face dismissal/conversion.

(CBS) Certified Bankruptcy Specialist Practice Test

(CBS) Certified Bankruptcy Specialist Practice Test

CBS CBS Consumer Bankruptcy & Debtor Education 2