Who Qualifies for Chapter 7? The Bankruptcy Means Test, Explained
The means test is a two-step income screen for Chapter 7. Step one, if your household income is at or below your state's median for your household size, you generally qualify. Step two, if you are above the median, a formula subtracts allowed expenses to see whether meaningful disposable income remains, if it does, you are steered toward Chapter 13's repayment plan instead. The dollar thresholds change regularly and vary by state.
The means test has the scariest name in consumer bankruptcy and the most reasonable purpose: it is how the system checks that the fast, powerful relief of Chapter 7 goes to the people who actually need it, and steers everyone else toward a repayment plan rather than out the door.
It arrived in 2005 (the BAPCPA reform law added it as Section 707(b) of the Code), and here is the plain-English version of how it works.
Step one: the median-income screen
Add up your household's average monthly income from the six months before filing, annualize it, and compare it to your state's median income for your household size.
At or below the median: you generally pass. Done. No second step, no expense spreadsheets. Most Chapter 7 filers qualify exactly this way.
Two important things about those medians. First, the dollar figures change regularly and vary by state and household size, which is why you will not find numbers printed here, printed numbers about the means test are how the internet lies to you by accident. The current tables live on the U.S. Trustee Program's website, and any bankruptcy attorney will run yours in minutes. Second, the income calculation has its own rules about what counts, notably, Social Security benefits are generally excluded, and the six-month lookback means a recent job loss can change your answer from month to month. If you just lost income, when you file can decide whether you pass. Timing questions like that are attorney territory, and cheap to ask.
Step two: the disposable-income formula
Above the median? You are not out. The test moves to a longer form: from your income, subtract a mix of actual and standardized allowed expenses (housing, transportation, taxes, health care, and so on, many pegged to IRS collection standards). What is left is your disposable income.
If the formula says meaningful money is left over each month, the law presumes Chapter 7 would be abusive in your case, because you could repay something, and points you to Chapter 13, where that disposable income becomes your plan payment. If nothing meaningful is left, Chapter 7 remains open despite the above-median income. High earners with high mandatory expenses pass step two more often than people expect.
There are also special carve-outs worth knowing exist (the details vary): the means test is applied differently or not at all for certain filers, including many disabled veterans and people whose debts are mostly business debts rather than consumer debts.
What failing actually means
The word "failing" oversells it. Not passing the means test almost never means "no bankruptcy for you." It means the express lane is closed and the structured lane is open: a Chapter 13 plan built from that same disposable-income math, with the automatic stay protecting you for the whole three to five years, your property kept, and eligible remaining debt discharged at the end.
For a household above the median with a home to protect, that is often the better tool anyway, the means test just makes the introduction.
The practical takeaway
Do not self-reject. People talk themselves out of relief every year because a neighbor said they "make too much to file." The screen is more forgiving than folklore says, the exclusions and expense allowances shift individual results, and the fallback is a workable plan rather than a closed door. Gather six months of income records, run the cost picture while you are at it, and put the question to a professional, most consultations are free, and this is the exact question they answer fastest.
Related questions
What income disqualifies you from Chapter 7?
There is no single national number. The screen compares your household income to your state's median for your household size, figures that adjust regularly. Above the median, you are not automatically out, a second-step expense formula decides whether Chapter 7 or Chapter 13 fits.
Does failing the means test mean you cannot file bankruptcy?
No. It generally means Chapter 7 presumes abuse for your case and Chapter 13 is the path instead, a 3-to-5-year plan sized to your actual disposable income. Failing the test closes one door, not the courthouse.
Is Social Security counted in the means test?
Social Security benefits are generally excluded from the means test's income calculation, a significant point for retirees and disabled filers. Which income counts and which does not is exactly the kind of detail an attorney checks in minutes.
This is education, not legal advice. Bankruptcy law is federal, but exemptions and key details vary by state, and every situation is different. Nothing here creates an attorney-client relationship. Before you make decisions about your finances, talk to a licensed bankruptcy attorney in your state. This article should make that conversation easier, not replace it.