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 North Carolina, as in all states, the means test is a requirement for debtors filing for Chapter 7 bankruptcy when their income is above the state median. The means test is designed to determine whether the filing is 'presumptively abusive' based on the debtor's financial situation. If the debtor's income over the next five years, minus certain allowed expenses, exceeds either $12,850 or 25% of their nonpriority unsecured debt (provided that this amount is at least $7,700), the filing is considered abusive. Debtors have the opportunity to rebut 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 typically be converted to a Chapter 13 bankruptcy, with the debtor's consent, or dismissed. It's important for debtors in North Carolina considering Chapter 7 bankruptcy to understand this test and consult with an attorney to navigate the complexities of the process.