The Means Test was introduced by BAPCPA in 2005 to ensure that people who can reasonably repay their debts file Chapter 13 (repayment) instead of Chapter 7 (elimination). But the test is more generous than most people assume. The majority of people who need Chapter 7 protection qualify.
What Is the Means Test?
The Means Test is a two-part formula that determines whether you have enough disposable income to repay a meaningful portion of your debts. If you pass, you can file Chapter 7 and have your unsecured debts eliminated. If you don't pass, you'll typically file Chapter 13 instead, which sets up a repayment plan.
The test is completed on Official Bankruptcy Form 122A-1 (Chapter 7 Statement of Your Current Monthly Income) and, if needed, Form 122A-2 (Chapter 7 Means Test Calculation). Your attorney will prepare these forms, but understanding the process helps you know what to expect.
Important: The Means Test only applies to Chapter 7 filings. If you're filing Chapter 13, there's no Means Test — but you do need to show you have enough regular income to fund a repayment plan.
Step 1 — The Income Comparison
The first step is straightforward: calculate your "Current Monthly Income" (CMI). This is your average gross monthly income over the 6 full calendar months before your filing date. Take that number and multiply by 12 to get your annualized CMI.
If your annual CMI is at or below the median income for your state and household size, you pass. Done. No further analysis needed. You qualify for Chapter 7.
"Median income figures are updated regularly by the U.S. Census Bureau and published by the Department of Justice. Your attorney will use the figures in effect at the time of your filing."
Example (illustrative):
A family of 4 in Texas with annual CMI of $90,000 compared against the Texas median of approximately $97,000 — they pass Step 1 and qualify for Chapter 7.
How to Calculate Your CMI
Your CMI calculation looks at the 6 complete calendar months before you file. For example, if you file on March 15, you'd look at September through February. Here's a step-by-step:
- Add up all gross income received during those 6 months (before taxes and deductions)
- Include income from all sources for all household members (see what counts below)
- Divide the total by 6 to get your Current Monthly Income
- Multiply by 12 to annualize it
- Compare to the median income for your state and household size
What Counts as Income (and What Doesn't)
Included in CMI:
- • Wages, salary, tips, and bonuses
- • Overtime pay
- • Business and self-employment income
- • Rental and investment income
- • Pension and retirement income
- • Unemployment compensation
- • Annuities
- • Regular contributions from others for household expenses
- • Spouse's income (even if filing individually)
NOT Included:
- • Social Security benefits (this is huge for retirees)
- • VA disability benefits
- • Supplemental Security Income (SSI)
- • Payments under the Social Security Act
- • Payments to victims of war crimes
- • Payments under the Terrorism Risk Insurance Act
The Social Security exclusion means many retirees and disabled individuals automatically qualify for Chapter 7, regardless of the amount they receive.
Median Income by State
The median income thresholds vary significantly by state and household size. They're updated periodically (usually every 6 months) by the U.S. Trustee Program. Here are some approximate annual figures for common household sizes to give you a sense of where the thresholds fall:
| State | 1 Person | 2 People | 3 People | 4 People |
|---|---|---|---|---|
| California | $64,000 | $83,000 | $86,000 | $97,000 |
| Texas | $56,000 | $72,000 | $77,000 | $90,000 |
| Florida | $53,000 | $68,000 | $70,000 | $82,000 |
| New York | $60,000 | $79,000 | $87,000 | $101,000 |
| Ohio | $50,000 | $63,000 | $70,000 | $83,000 |
| Illinois | $55,000 | $71,000 | $79,000 | $94,000 |
Note: These figures are approximate and for illustration only. Actual median income amounts change periodically. Your attorney will use the current figures at the time of your filing. For each additional household member beyond 4, approximately $9,000-$10,000 is added.
Step 2 — The Expense Analysis (If Your Income Exceeds the Median)
If your income exceeds the state median, don't panic — you're not disqualified yet. You simply move to Step 2, where you complete the full Means Test form (Form 122A-2). This step subtracts IRS-approved "allowed expenses" from your income to determine your actual disposable income.
The allowed deductions are often quite generous and include:
- IRS Local Standards for housing and utilities (based on your county — these can be surprisingly high in expensive areas)
- IRS National Standards for food, clothing, personal care, and miscellaneous expenses
- Actual payments for secured debts (mortgage, car loans) — your full monthly payment counts
- Health insurance, disability insurance, and health savings account contributions
- Mandatory payroll deductions (taxes, Social Security, Medicare, mandatory retirement)
- Childcare and education costs for dependent children
- Court-ordered payments (child support, alimony)
- Additional qualifying expenses for health conditions, telecommunications, and other categories
- Priority debts divided over 60 months (tax debts, support obligations)
After all these deductions, if your remaining monthly disposable income is below a threshold (currently $176.25/month), you pass. If it's between $176.25 and $294.58, it depends on your total unsecured debt. If it's above $294.58/month, you presumptively don't qualify for Chapter 7 — but you can still rebut the presumption with special circumstances.
The Math in Simple Terms:
Your Monthly Income (averaged over 6 months)
− IRS allowed living expenses
− Actual secured debt payments
− Health insurance & other qualifying expenses
− Mandatory deductions
= Monthly Disposable Income
If this number is low enough → You qualify for Chapter 7
What If You Don't Pass the Means Test?
Not passing the Means Test is not the end of the road. You have several options:
1. File Chapter 13 Instead
Chapter 13 has no Means Test. You create a repayment plan based on what you can afford, pay for 3-5 years, and remaining eligible debts are discharged. Many people find Chapter 13 actually works better for their situation — especially if they have a home to save or assets to protect.
2. Wait and Refile
Since the Means Test uses a 6-month income look-back, a change in your income situation could change the result. If you recently lost a job, took a pay cut, or had a significant income reduction, waiting a few months for that lower income to be reflected in the 6-month average may allow you to pass.
3. Rebut the Presumption
Even if the numbers say you don't pass, you can argue "special circumstances" — such as a serious medical condition, military service, or other factors that make your expenses unusually high or your income unsustainable. You'll need documentation and your attorney's help to make this case.
4. Maximize Your Deductions
An experienced attorney may find deductions you didn't know about. Contributions to retirement, health insurance premiums, childcare costs, education expenses, and many other items reduce your disposable income on the test. The difference between passing and failing often comes down to knowing which deductions apply.
Special Situations and Exemptions
Several groups of people are partially or fully exempt from the Means Test:
- Disabled veterans: If your debts were primarily incurred during active duty or while performing a homeland defense activity, the Means Test doesn't apply to you. This is a powerful exemption for veterans who accumulated debt during service.
- Military service members: Active duty members and reservists called to active duty have additional protections and exemptions under the Servicemembers Civil Relief Act.
- Business debtors: If more than 50% of your debt is business debt (not consumer debt), the Means Test doesn't apply. This is common for small business owners and self-employed individuals.
- Income changes: If your income has changed significantly between the 6-month look-back period and your filing date (e.g., you lost your job), your attorney may be able to argue that the Means Test doesn't accurately reflect your ability to pay.
- Social Security recipients: Since Social Security income is excluded from CMI, retirees and disabled individuals whose primary income is Social Security often pass easily, even with relatively high total income.
Practical Tips for the Means Test
- Timing matters: The 6-month look-back period is crucial. If you had a high-income month (bonus, overtime, severance), it might make sense to wait until that month falls outside the 6-month window.
- Gather all documentation: You'll need 6 months of pay stubs, tax returns, bank statements, and records of all income. The more thorough your documentation, the smoother the process.
- Don't guess — calculate: Use our Means Test Pre-Qualifier for a quick estimate, then work with an attorney for the precise calculation.
- Household size matters: Your household size includes everyone who lives with you and whose expenses you share — not just tax dependents. A larger household means a higher income threshold.
- Marital filing considerations: If you're married, your spouse's income is generally included even if only one of you files. However, there's a "marital adjustment" deduction for the portion of your spouse's income that goes to their separate expenses.
Common Questions About the Means Test
Does my spouse's income count if only I'm filing?
Yes, if you're married and living together, your spouse's income is included in the household income calculation. However, you can deduct the portion of your spouse's income used for their own expenses (the "marital adjustment"). In some cases, filing jointly or separately can affect whether you pass.
What if I'm self-employed?
Self-employment income is included, but you can deduct ordinary and necessary business expenses. The net profit (or loss) from your business is what counts toward your CMI. If your business has been struggling, this could actually help you pass the test.
Can I time my filing to pass the test?
Strategic timing is legal and common. If you received a large bonus 5 months ago, waiting 2 more months means it drops out of the 6-month window. Your attorney can help you determine the optimal filing date based on your income history.
What if I just lost my job?
Job loss often makes the Means Test much easier to pass, but the effect depends on timing. If you lost your job recently, you may need to wait a few months for your lower (or zero) income to bring down the 6-month average. Unemployment benefits are included as income, but they're typically much less than your former salary.
Is the Means Test the only eligibility requirement?
No. You also must not have received a Chapter 7 discharge in the past 8 years, must complete credit counseling, must not have had a case dismissed for abuse in the past 180 days, and must file all required tax returns. But for most people, the Means Test is the primary hurdle.
Want to see where you stand?
Take our free Means Test Pre-Qualifier — it takes under 2 minutes and gives you a preliminary answer.
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