Navigating the Newly Reinforced Means Test: Bowling Green Edition

Filing for bankruptcy is a big decision, and if you live in Bowling Green, one of the first things you’ll need to deal with is the Means Test. This test helps figure out whether you can file for Chapter 7, which wipes out most of your debt, or if you’ll need to go with Chapter 13, where you pay some of it back over time.

Lately, the rules around the Means Test have gotten stricter, so it’s more important than ever to understand how it works before you move forward. If you’re thinking about filing, this guide will help you learn what the test is, what’s changed, and how to protect yourself as you go through the process.

What’s Changed with the Reinforced Means Test?

The reinforced version of the Means Test includes a few significant updates. These include:

• New income limits adjusted for inflation: The U.S. Trustee Program updated median income thresholds using fresh Census data effective April 1, 2025. For example, a household of four might now compare against a higher median, making it more difficult for borderline households to pass.
• Stricter documentation requirements to back up your reported income and expenses: The U.S. Trustee now expects “necessary expense” deductions to be supported by clear documentation in line with IRS Collection Financial Standards. This means courts may request proof rather than accept your numbers at face value
• Changes in allowed deductions for living expenses: IRS and U.S. Trustee-approved living expense standards were revised on April 21, 2025—covering housing, utilities, and transportation, among others. While inflation-driven changes can help by increasing allowable expenses, they also tighten the types of expenses you can legitimately deduct.

For Bowling Green residents, these updates mean qualifying for Chapter 7 might be tougher—especially if your income is near the state median or if your actual expenses don’t fit neatly into the IRS standards. That’s why staying up to date—and organized—is incredibly important before filing.

How the Means Test Works Step-by-Step

The Means Test might sound complicated, but here’s a simplified breakdown of how it usually works from start to finish:

Step 1: Compare your income to Kentucky’s median income level.

Start by adding up all your household income over the past six months—this includes wages, side income, rental income, and even regular financial help from family or friends. Then, compare your total income to the current median income for a household of your size in Kentucky. If your income is below that number, you typically qualify for Chapter 7 bankruptcy and can move forward with that option.

Step 2: List your allowed monthly expenses.

If your income is above the median, the next step is to list out your regular, necessary expenses. This includes rent or mortgage payments, food, utilities, medical costs, transportation, insurance, and other living expenses. 

However, it’s important to know that the law uses standard guidelines—often based on IRS figures—for many of these costs. That means your actual spending may not fully count, especially if it’s considered higher than what’s allowed for your area or family size.

Step 3: Calculate your disposable income.

Once you subtract the allowed expenses from your income, what’s left is your “disposable income.” If that amount is too high, the court may decide that you have enough money to repay some of your debts through a Chapter 13 plan, rather than eliminating them under Chapter 7. In other words, your ability to pay back debts—even partially—can shift the type of bankruptcy you’re allowed to file.

If you “fail” the Means Test, it doesn’t mean you’re out of options. It just means Chapter 7 may not be available to you. In that case, Chapter 13 could still give you a manageable path to restructure your debt and pay it off over time.

Common Pitfalls to Avoid

Going through the Means Test can feel overwhelming, especially with the updated rules. But knowing what not to do can save you from costly mistakes. Here are some common missteps to watch out for—and how to avoid them:

Guessing your income or expenses

Don’t estimate or round numbers when filling out your forms. Even small inaccuracies can raise red flags with the court or trustee. 

Always rely on official documents like pay stubs, tax returns, bank statements, and bills to make sure your financial information is complete and correct. Guessing can not only delay your case but might also lead to a denial of your preferred bankruptcy option.

Trying to hide assets or shift money around

Some people think moving money to a family member’s account or leaving assets off the paperwork will help them qualify for Chapter 7. This is a serious mistake. Intentionally hiding assets is considered fraud and can lead to your case being thrown out—or worse, legal penalties. Always be upfront and transparent about what you own and where your money is.

Filing without reviewing recent financial activity

The Means Test focuses heavily on your income from the past six months, not just your current situation. If your income recently dropped, it might be smart to wait a little while before filing. 

On the flip side, if you’ve had irregular income or one-time payments, they could push your numbers higher than expected. Take time to look closely at your financial history before deciding when to file.

Signing paperwork without legal advice

The bankruptcy process involves a lot of legal forms and fine print. With the recent changes to the Means Test, it’s even more important to understand what you’re signing. 

Never rush into agreeing to anything—especially paperwork from the court or an insurance company—without talking to a bankruptcy attorney. Getting advice early from a Bowling Green bankruptcy lawyer can prevent bigger problems later and help you avoid losing out on options you may not even realize you had.

Avoiding these pitfalls won’t just help your case go more smoothly—it can also protect you from unnecessary delays, stress, or legal trouble down the road.

Conclusion

Dealing with financial struggles is never easy, and deciding whether to file for bankruptcy can feel like a big leap. The Means Test may seem complicated, especially with the new changes, but it’s just one part of figuring out the best way forward.

Take your time, stay informed, and don’t be afraid to ask questions along the way. Whether you’re weighing your options or already preparing to file, getting the right support can make the process feel a lot less overwhelming.