If you’ve started researching Chapter 7 bankruptcy, chances are you’ve run into the phrase “means test” and immediately had more questions than answers. It sounds intimidating — like a pass/fail exam standing between you and debt relief. In reality, it’s a formula, and roughly 90% of people who file for bankruptcy qualify for Chapter 7 based on income alone, without ever needing the more complicated second step.

At Long & Long P.C., walking clients through the means test is one of the first things we do in a free consultation. Here’s exactly how it works.

What Is the Bankruptcy Means Test?

The means test is a formula created by federal law (11 U.S.C. § 707(b)) to determine whether your income is low enough to qualify for Chapter 7 bankruptcy, or whether you should instead file Chapter 13. It exists to prevent higher-income earners from wiping out debt they could reasonably afford to repay.

The test only applies if your debts are primarily consumer debts — credit cards, medical bills, personal loans. If your debt is mostly business-related or tax debt, the means test typically doesn’t apply to you at all. Disabled veterans may also be exempt, depending on when the debt was incurred.

Step 1: Compare Your Income to Your State’s Median

This is where most filers get their answer.

1. Add up all household income from every source over the six full calendar months before you file — this is your “current monthly income” (CMI).
2. Multiply that six-month total to get an annualized figure.
3. Compare that number to the published median income for your state and household size.

If your income falls at or below the median, you automatically pass Step 1 — no further calculations needed. You’re clear to file Chapter 7.

A few things worth knowing about this calculation:

• Income thresholds vary significantly by state — and even by household size within the same state — so what qualifies a single filer in one state might not qualify a family of four in another.
• Most income counts, including wages, self-employment income, rental income, and pension payments. Social Security benefits are generally excluded from the calculation.
• If you’re married, your spouse’s income is typically included, even if they aren’t filing with you — though you may be able to deduct amounts your spouse pays toward their own separate debts.
• Because the six-month lookback is based on full calendar months, timing your filing date can sometimes affect which months are counted — which is exactly the kind of detail an attorney should review with you before you file.

Step 2: If You’re Over the Median, It’s Not Over

Being above the median income doesn’t automatically disqualify you from Chapter 7. It just means you move to a second calculation that looks at your actual disposable income.

In this step, you subtract IRS-allowed living expenses — and certain real expenses like mortgage payments, car payments, and back taxes or support arrears — from your income. If what’s left over is too small to fund a meaningful Chapter 13 repayment plan, you can still pass the means test and qualify for Chapter 7.

This is the stage where many “over-median” filers discover they still qualify, because expenses like childcare, health costs, and secured debt payments pull disposable income down below the threshold. It’s also the stage where a bankruptcy attorney’s experience matters most — the deductions are technical, and small mistakes can mean the difference between qualifying and not.

What Happens If You Don’t Pass the Means Test?

Failing the means test doesn’t mean you’re out of options — it typically means Chapter 7 isn’t presumptively available, and Chapter 13 becomes the more realistic path. Chapter 13 has no means test; instead, you repay a portion of your debt over a three- to five-year court-approved plan based on what you can actually afford.

In some cases, filers who fail the means test can still argue “special circumstances” to rebut the presumption against Chapter 7 — but this requires solid documentation and is best handled with an attorney.

Common Means Test Questions

Does the means test look at my current income or last year’s income? Neither, technically. It looks at your average income over the six full calendar months immediately before your filing date, then annualizes that number — which can differ significantly from your current pay or last year’s tax return, especially if your income recently changed.

What if my income just dropped right before I want to file? This is common — job loss, reduced hours, or a medical issue often leads people to bankruptcy in the first place. Because the test uses a six-month lookback, a recent drop in income may not be reflected immediately. Timing your filing date correctly can make a real difference, which is why this is worth discussing with an attorney before you file anything.

Do all my household members’ incomes count? Generally, yes — the means test looks at total household income, not just the filer’s income, even if a spouse isn’t filing. There are some deductions available for a non-filing spouse’s separate expenses.

Is there a means test for Chapter 13? No. Chapter 13 doesn’t have a means test in the same sense — instead, your income and expenses determine the size and length of your repayment plan.

Can I just estimate this myself online? Online calculators can give you a rough sense of where you stand, but the real test uses current official median income figures (updated twice a year) and detailed IRS expense standards. A DIY estimate can be a helpful starting point, but it isn’t a substitute for a professional review of your actual numbers.

Let Long & Long P.C. Run the Numbers With You

The means test involves precise figures that update regularly, multiple categories of deductible expenses, and rules that shift depending on your state and household size. Getting it right the first time can save you months of delay — or the wrong filing entirely.

Schedule your free consultation with Long & Long P.C. now via the website portal or calling 303-832-2655 and we’ll walk through your income, expenses, and household situation to tell you clearly whether Chapter 7 is on the table — before you file a single form.

This article is for informational purposes only and does not constitute legal advice. Means test figures and thresholds change periodically — consult with a licensed attorney at Long & Long P.C. to review your current numbers.