Why the Means Test Exists
Before 2005, virtually anyone could file Chapter 7 regardless of income. Then Congress passed BAPCPA (the Bankruptcy Abuse Prevention and Consumer Protection Act) and bolted on the means test — now codified at 11 U.S.C. § 707(b)(2) — as the gatekeeper. The logic was simple: earn enough to repay some of your debts, and you should file Chapter 13 instead. Earn below your state median? You're through the gate automatically.
Here's the thing — despite its reputation for complexity, the means test is fundamentally a two-step income comparison. Step one compares your income to your state's median. Step two, which only applies if your income exceeds the median, calculates whether you have enough disposable income to fund a hypothetical repayment plan. Understanding these two steps — and the specific rules for each — is the key to determining whether you qualify for Chapter 7.
It is worth noting that certain filers are exempt from the means test entirely. If your debts are primarily business debts (rather than consumer debts), the means test doesn't apply. Disabled veterans whose debts were incurred primarily during active duty or while performing homeland defense activity are also exempt under 11 U.S.C. § 707(b)(2)(D). For everyone else, the means test is mandatory.
Step 1: The Median Income Comparison
The first step of the means test compares your "current monthly income" (CMI) to the median household income for your state and household size. CMI is defined in 11 U.S.C. § 101(10A) as your average monthly gross income from all sources over the six full calendar months before filing. This includes wages, salary, tips, bonuses, overtime, self-employment income, rental income, pension and retirement income, Social Security benefits, unemployment compensation, and regular contributions from a spouse or third party.
The median income figures are published by the U.S. Census Bureau and updated periodically by the U.S. Trustee Program at justice.gov/ust. For example, the 2025 median annual income for a family of four in Ohio is approximately $84,000, while in California it is approximately $104,000. These numbers vary significantly by state, which is why a family that fails the means test in one state might pass easily in another.
If your annualized CMI (monthly CMI multiplied by 12) is at or below your state's median for your household size, you pass the means test automatically. You don't need to complete the second step. You are eligible for Chapter 7. Our Chapter 7 Means Test Calculator uses the most current Census Bureau median income data for all 50 states — enter your income and household size to see where you stand.
Step 2: The Disposable Income Calculation
If your income exceeds the state median, you proceed to the disposable income calculation — the more complex part of the means test. This step subtracts allowable expenses from your CMI to determine whether you have enough "disposable income" to repay creditors. If your disposable income is below certain thresholds, you still pass the means test despite having above-median income.
Allowable expenses fall into several categories. The IRS National Standards set fixed allowances for food, clothing, housekeeping supplies, personal care, and miscellaneous expenses — these amounts are the same nationwide and are published at irs.gov/businesses/small-businesses-self-employed/means-testing. The IRS Local Standards set housing and utility allowances that vary by county, and transportation allowances that vary by region. You use the IRS standard amounts regardless of your actual spending in these categories — if the standard allows $1,800 for housing but you only spend $1,200, you still deduct $1,800.
Beyond the IRS standards, you can deduct actual payments on secured debts (mortgage, car loan), actual health insurance and disability insurance premiums, mandatory payroll deductions (taxes, Social Security), child care expenses, education expenses for disabled children, and certain other documented costs. The full list is detailed on Official Bankruptcy Form 122A-2, available at uscourts.gov. The calculation is intricate, which is why our means test calculator is designed to walk you through each deduction category step by step.
Understanding the Threshold Numbers
After subtracting all allowable expenses from your CMI, you are left with your monthly disposable income. This number determines your eligibility through a set of thresholds that the Judicial Conference adjusts periodically. Under the current framework, if your monthly disposable income multiplied by 60 (representing five years of payments) is less than $8,975, you pass — the presumption of abuse doesn't arise and you can file Chapter 7.
If that same calculation produces a number above $14,950, you fail — there is a presumption of abuse and you must file Chapter 13 unless you can demonstrate special circumstances. If the number falls between $8,975 and $14,950, you pass only if your 60-month disposable income is less than 25% of your total non-priority unsecured debt. These thresholds are published and updated on uscourts.gov.
The "presumption of abuse" isn't an automatic denial of Chapter 7. It can be rebutted by demonstrating "special circumstances" — such as a serious medical condition or a call to active military duty — that justify additional expenses or adjustments to income not captured by the standard means test calculation. However, rebutting the presumption requires documentation and a court hearing, which adds cost and complexity to the filing.
Common Income Complications
The six-month lookback period for calculating CMI creates several traps for the unwary. If you received a large bonus, severance payment, or tax reimbursement during the lookback period, it inflates your CMI and may push you above the state median even though your ongoing income is much lower. Conversely, if you recently lost your job, the lookback period may include months of higher income that no longer reflect your reality.
Social Security benefits present a unique wrinkle. Under 11 U.S.C. § 101(10A), Social Security income is excluded from the CMI calculation for purposes of the means test. This is significant for retirees — if Social Security is your primary income, you will almost certainly pass the means test regardless of the amount, because it's not counted. However, Social Security income is considered in your budget analysis (Schedules I and J) and in determining whether you can fund a Chapter 13 plan.
Married couples face additional complexity. If you file individually but your non-filing spouse contributes to household expenses, a portion of their income must be included in your CMI under the "marital adjustment." However, you can deduct the non-filing spouse's separate expenses (debts, taxes, child support from a prior marriage) from that amount. The interplay between spousal income inclusion and the marital adjustment deduction is one of the most frequently litigated aspects of the means test.
What Happens If You Fail the Means Test
Failing the means test doesn't mean you can't file bankruptcy — it means you likely can't file Chapter 7. Your primary alternative is Chapter 13 bankruptcy, which doesn't have a means test. Under Chapter 13, you repay a portion of your debts from your disposable income over three to five years. Ironically, the same disposable income that disqualified you from Chapter 7 is what funds your Chapter 13 plan. Use our Chapter 13 Payment Plan Calculator to estimate your potential monthly payment.
In some cases, strategic timing can make the difference. Because CMI is based on the six months before filing, waiting to file can change the calculation. If your income recently decreased (due to job loss, reduced hours, or retirement), waiting a few months allows the higher-income months to fall out of the lookback window and the lower-income months to replace them. A bankruptcy attorney can run the means test for different hypothetical filing dates to find the optimal timing.
There is also a rarely used alternative: filing Chapter 7 despite failing the means test and rebutting the presumption of abuse with evidence of special circumstances. This requires filing a detailed statement with the court explaining the circumstances and providing documentation. Examples that courts have accepted include extraordinary medical expenses not captured in the standard allowances, involuntary pay cuts, and increased expenses from caring for an aging or disabled family member. This path is difficult but not impossible.
Tips for Preparing Your Means Test
Gather six months of pay stubs, bank statements, tax returns, and records of all income sources before calculating your means test. The lookback period covers the six full calendar months before the month you file — if you file in March, the lookback covers September through February. Every source of income matters: wages, freelance payments, rental income, alimony received, and regular gifts or support payments.
Document your actual expenses thoroughly, but remember that the means test uses IRS standard allowances for many categories, not your actual spending. Where you do use actual figures — secured debt payments, health insurance, child care — have receipts and statements ready. The trustee may request verification of any expense you claim on the means test form.
Finally, use our Chapter 7 Means Test Calculator to run the numbers before consulting with an attorney. Having a preliminary means test result will make your initial consultation more productive and help you understand whether Chapter 7 or Chapter 13 is the more likely path. The calculator uses current Census Bureau median income data and IRS expense standards for all 50 states.
Disclaimer: This article is for general educational purposes only and does not constitute legal advice. Made For Law is not a law firm, and our team are not attorneys. We are not affiliated with any federal, state, county, or local government agency or court system. Content may be researched or drafted with AI assistance and is reviewed by our editorial team before publication. Laws change frequently — always verify information with official sources and consult a licensed attorney for advice specific to your situation. Full disclaimer
Our editorial team researches and summarizes publicly available legal information. We are not attorneys and do not provide legal advice. Every article is checked against current state statutes and official sources, but you should always consult a licensed attorney for guidance specific to your situation.
