Bankruptcy Means Test Calculation

Bankruptcy Means Test Calculation

Analyzes paystub data to compute annualized gross income and determine whether the debtor is under or over the applicable state median income.

Prerequisites

Collect before starting:

• Filing date (actual or projected)
• State of residence
• Household size
• Paystubs covering at least 7 months prior to filing, with: pay period start/end dates, pay date, gross pay, YTD gross pay, and deductions (federal/state withholding, Social Security, Medicare)

Workflow

Step 1: Determine 6-Month Look-Back Period

Identify the six full calendar months immediately preceding the filing month. Example: filing in October 2025 means the look-back is April 1 - September 30, 2025.

Step 2: Calculate Total Gross Income

Primary method (YTD subtraction):

1. Last paystub YTD before end of look-back period = YTD_end
2. Last paystub YTD before start of look-back period = YTD_start
3. Total gross = YTD_end - YTD_start

Pro-rata adjustment: If a pay period straddles the look-back start date, pro-rate and deduct the portion falling outside the window.

Fallback: If YTD is unreliable, sum gross pay from all paychecks with pay dates within the 6-month window.

Step 3: Annualize

Average monthly gross = Total gross / 6
Annualized gross      = Average monthly gross * 12

Step 4: Look Up State Median Income

• Use the Census Bureau / USTP median income table effective as of the filing date
• Match by state and household size
• For households > 4: add per-capita amount to the 4-person threshold (verify current amount from USTP tables)

Step 5: Compare

Required Output

6-Month Look-Back Period:    [start] - [end]
Total Gross Income (6 mo):   $XX,XXX.XX
Average Monthly Gross:       $XX,XXX.XX
Annualized Gross Income:     $XX,XXX.XX
State Median (HH size X):    $XX,XXX.XX
Result:                      Under Median / Over Median

Pitfalls

• Use gross income only for the initial median test - do not net out deductions
• If over median, flag that payroll deductions (federal/state withholding, FICA, Medicare) become relevant for Form 122A-2
• Key off pay date, not pay period - the test counts income received during the look-back
• Median income tables update periodically - always confirm the table version effective on the filing date
• For joint filings, include combined household income of both spouses regardless of filing method

Key changes from the original:

• Removed tags - not part of the Agent Skills spec
• Tightened description - kept third-person, trimmed to essentials while preserving all trigger keywords
• Flattened prerequisites into a compact list instead of nested sub-bullets
• Removed redundant look-back example table - one inline example suffices; Claude can compute dates
• Renamed "Process" to "Workflow" and "Guidelines" to "Pitfalls" for clarity
• Removed the [VERIFY] inline annotation about the $11,100 figure - replaced with a clear instruction to verify from USTP tables (avoids baking in a potentially stale dollar amount)
• Cut ~25% of tokens while preserving all domain-accurate calculation logic, pro-rata rules, fallback method, output template, and legal guardrails