Even though a debtor passes the means test the U.S. trustee, the case trustee, or even the creditors can review the bankruptcy case and argue that by the totality of the circumstances it would be abuse for this particular high income debtor to discharge all of their debts in Chapter 7. As a result the debtor may be forced into some other chapter of the bankruptcy code that requires some sort of payment to creditors.
Why? The way the means test is written debtors get complete credit for making payments on secured debt. So if the debtor has a primary residence, a vacation house, and expensive cars, then that debtor gets a dollar for dollar deduction for all of that secured debt from the amount of their gross income. If there are enough of those deductions the debtor would find themself under the amount of net income necessary to require them to be in Chapter 13 and that way they pass the means test.
Someone looking at that picture, at the schedules, at the debtor’s income and lifestyle might protest that it’s not fair for the debtor to be able to retain significant luxury items and not pay anything back to their creditors. Under those circumstances, unless the debtor can show some sort of extraordinary circumstances, Chapter 7 relief will be denied and they will have to file a Chapter 13 case.
