If the debtor's current monthly income is more than the state median, the Bankruptcy Code requires application of a means test to determine whether the chapter 7 filing is presumptively abusive. Abuse is presumed if the debtor's aggregate current monthly income over 5 years, net of certain statutorily allowed expenses, is more than (i) $12,850, or (ii) 25% of the debtor's nonpriority unsecured debt, as long as that amount is at least $7,700.

The debtor may rebut a presumption of abuse only by a showing of special circumstances that justify additional expenses or adjustments of current monthly income. Unless the debtor overcomes the presumption of abuse, the case will generally be converted to chapter 13 (with the debtor's consent) or will be dismissed.

In California, if a debtor's income exceeds the state median, the means test, as outlined in the Bankruptcy Code, is applied to determine if a Chapter 7 bankruptcy filing is considered abusive. The test calculates whether the debtor's income over the next five years, minus allowable expenses, exceeds either $12,850 or 25% of their nonpriority unsecured debt, provided that this amount is at least $7,700. If the income is above these thresholds, the filing is presumed abusive. The debtor has the opportunity to counter this presumption by demonstrating special circumstances that warrant additional expenses or adjustments to income. If the debtor cannot rebut the presumption, the bankruptcy case will likely be converted to a Chapter 13 bankruptcy, with the debtor's agreement, or dismissed.