Presumption of Abuse

In chapter 7 bankruptcy, the means test is used to compare a debtor's recent income to certain expense allowances, and arrive at a statutory " disposable income". If this calculation shows disposable income over 60 months above $11,725, a presumption of abuse arises; if less than $7,025, a presumption does not arise. If between these two totals, the presumption arises only if the disposable income equals or exceeds 25% of general unsecured debt. A presumption can be rebutted by showing special circumstances; however, absent such showing a presumption of abuse will likely result in dismissal of the chapter 7 case.

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