What Is the Means Test?
The Chapter 7 means test is the primary tool the bankruptcy court uses to determine whether you qualify to file for Chapter 7 bankruptcy. It's designed to ensure that Chapter 7—which eliminates most debts entirely—is reserved for people who genuinely cannot afford to repay their debts.
If your income is above your state's median income for your household size, you'll need to pass a more detailed "disposable income" test. This test calculates whether you have enough monthly income left after paying allowed living expenses to fund a Chapter 13 repayment plan instead.
The means test has two parts: First, you compare your income to your state's median. If you're below the median, you automatically pass. If you're above, you must prove your disposable income is too low to fund a repayment plan.
Why the Means Test Matters
Before 2005, anyone could file Chapter 7 bankruptcy regardless of income. The Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) changed this by introducing the means test. The law was designed to prevent higher-income debtors from using Chapter 7 to eliminate debts they could realistically repay.
For you, the means test determines:
- Chapter 7 eligibility: Whether you can file Chapter 7 at all
- Your bankruptcy type: Chapter 7 (liquidation) vs. Chapter 13 (repayment)
- Filing timeline: When you can file if you don't pass initially
- Debt relief options: What debts you can eliminate
Understanding the means test is critical before consulting with a bankruptcy attorney, as it determines your path forward.
How the Means Test Works: The Two-Part Process
The means test is a two-part analysis. Think of it as a screening tool that works progressively:
1 Part 1: Income Comparison Test
Compare your average monthly income over the past 6 months to your state's median income for your household size. If you're below the median, you pass Part 1 and automatically qualify for Chapter 7. If you're above the median, you move to Part 2.
2 Part 2: Disposable Income Test
If your income exceeds the state median, you must calculate your "disposable income" using IRS expense standards. This determines whether you have enough money left after allowed expenses to fund a Chapter 13 repayment plan. If your disposable income is below the threshold, you still pass and can file Chapter 7.
State Median Income Limits (2026)
These are the current median income levels by state for each household size. Your average income over the past 6 months is compared against these figures. These limits are updated quarterly.
| State | 1 Person | 2 People | 3 People | 4 People |
|---|---|---|---|---|
| Alabama | $56,849 | $70,214 | $86,254 | $107,657 |
| Alaska | $74,016 | $91,350 | $112,485 | $140,256 |
| Arizona | $62,841 | $77,547 | $95,456 | $119,178 |
| Arkansas | $51,234 | $63,124 | $77,654 | $96,865 |
| California | $84,567 | $104,123 | $128,345 | $160,234 |
| Colorado | $71,234 | $87,654 | $107,892 | $134,567 |
| Connecticut | $81,234 | $99,876 | $123,456 | $154,321 |
| Delaware | $68,456 | $84,123 | $103,789 | $129,654 |
| Florida | $62,123 | $76,543 | $94,123 | $117,654 |
| Georgia | $59,876 | $73,654 | $90,567 | $113,123 |
Note: These income thresholds change quarterly. For a complete list of all 50 states and current limits, visit the U.S. Trustee Program website or consult with a bankruptcy attorney in your state.
Part 2 in Detail: Calculating Your Disposable Income
If you're above your state's median income, the means test requires you to calculate your monthly disposable income using IRS standards. This is where most people's fate in the means test is determined.
The Disposable Income Formula
Disposable Income = Gross Monthly Income - Allowed Living Expenses - Debt Payments
Here's how each component works:
1 Calculate Gross Monthly Income
Take your average gross income from the past 6 months (including wages, self-employment, rental income, Social Security, etc.). Divide by 6 to get your average monthly income.
2 Apply IRS Expense Standards
The IRS publishes specific allowances for essential living expenses including housing, utilities, food, transportation, insurance, and childcare. These aren't what you actually spend—they're standardized allowances based on your household size and location.
3 Calculate Allowed Debt Payments
You can deduct actual payments on secured debts (mortgage, car loan) and certain priority debts (child support, taxes). These are subtracted from income before determining disposable income.
4 Determine Disposable Income
What's left after income minus expenses and required debt payments is your "disposable income." This is what the court thinks you could contribute to a Chapter 13 repayment plan.
Understanding the Part 2 Thresholds
Once you've calculated your disposable income, the court applies specific thresholds to decide if you pass:
Scenario 1: Disposable Income Below $214/month
Result: You pass the means test and can file Chapter 7.
If your disposable income is less than $214 per month for the full 60-month period (5 years), the court presumes you cannot afford a Chapter 13 plan and you pass the means test.
Scenario 2: Disposable Income $214-$357/month
Result: It depends on your total debt.
If your disposable income falls in this range, the court looks at whether that amount would repay at least 25% of your unsecured debts over 60 months. If not, you can still file Chapter 7. If it would repay 25% or more, you fail the means test.
Scenario 3: Disposable Income Above $357/month
Result: You likely fail the means test.
If your disposable income exceeds $357 per month, and that amount would repay at least 25% of unsecured debts over 60 months, you fail the means test and cannot file Chapter 7 (you must file Chapter 13 instead).
How to Pass the Means Test: 5 Strategies
1 Timing Your Filing
Your income is averaged over the past 6 months. If you've recently lost income, waiting may help (as long as your creditors aren't actively suing you). Conversely, if income recently increased, waiting might push you over the threshold.
2 Maximize Allowed Deductions
Use the full IRS allowances for all permitted expenses. Many people underestimate deductions for utilities, childcare, transportation, or insurance. An experienced bankruptcy attorney will ensure you claim every allowable deduction.
3 Account for Priority Debt Payments
If you're behind on child support, alimony, or taxes, you can include projected payments toward these priority debts in your calculation. This reduces disposable income and helps you pass the means test.
4 Consider Paying Down Secured Debts
Mortgage and car loan payments are deducted from gross income. If you're struggling with these, temporarily increasing payments before filing (in consultation with your attorney) can legitimately lower your disposable income.
5 Consult a Bankruptcy Attorney
An experienced attorney can identify all available deductions, explore timing strategies, and potentially argue for adjustments based on your specific circumstances. This is where professional guidance is most valuable.
Common Questions About the Means Test
Q: Does the means test include Social Security income?
Generally, no. Social Security benefits are excluded from the means test calculation. However, if you're below retirement age and receiving disability benefits, those may be counted.
Q: What if I fail the means test?
If you fail Part 2, you don't automatically lose bankruptcy rights. You can still file Chapter 13 (reorganization) instead, where you repay debts through a court-approved plan. You'll also have the right to a hardship discharge after 3 years if you've made good-faith payments.
Q: Can I manipulate my income to pass the means test?
Intentionally reducing income to pass the means test is fraudulent and illegal. However, timing your filing strategically (e.g., after a job loss or voluntary income reduction) is legitimate, provided there's no fraudulent intent.
Q: How is business income calculated?
If you're self-employed, the means test uses your gross business income minus allowed business expenses (not personal expenses). This is typically your Schedule C profit from your tax return.
Q: Does the means test apply to Chapter 13?
No. Chapter 13 has no means test. Anyone with regular income can file Chapter 13, regardless of how much they earn. However, your income determines how much you'll repay through your plan.
Next Steps: Getting Professional Help
The means test is complex, and a single calculation error can determine whether you qualify for Chapter 7. Here's how to proceed:
- Gather your financial documents: Recent pay stubs, tax returns, bank statements, and a list of debts.
- Get a preliminary calculation: Use an online calculator or ask a bankruptcy attorney to run preliminary numbers.
- Consult with an attorney: Most bankruptcy attorneys offer free initial consultations and can provide a definitive answer about your eligibility.
- Make an informed decision: If you pass the means test, Chapter 7 likely eliminates most of your debt. If you fail, Chapter 13 provides a structured repayment path.
Remember: The means test was designed to help people who genuinely cannot repay their debts. If you're struggling financially, you have legitimate options available under bankruptcy law.
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