Chapter 7 Bankruptcy Means Test Calculator
Household Information
Monthly Income (Last 6 Months Average)
Monthly Expenses (Required for Above-Median Filers)
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How to Use This Calculator
This calculator helps you determine if you qualify for Chapter 7 bankruptcy based on the means test required by federal law. The process is straightforward – just follow these steps:
Step 1: Select Your Location and Household
Start by choosing your state and household size. Each state has different median income thresholds, and your household size directly impacts which threshold applies to you. Make sure to count all people living in your home who depend on your income.
Step 2: Enter Your Income Sources
Calculate your average monthly income from the past six months. Add up each income source separately – this includes wages, business income, rental properties, pensions, and alimony. Remember that Social Security benefits don’t count toward your means test income.
Step 3: Review Your Results
Once you click calculate, you’ll immediately see if you pass the means test. If your income is below the state median, you automatically qualify. If it’s above, you’ll need to enter your monthly expenses to complete the second phase.
Step 4: Add Expenses (If Needed)
When your income exceeds the median, the calculator will ask for your monthly expenses. Be accurate here – include housing costs, utilities, food, transportation, healthcare, and other necessary expenses. These deductions help determine your disposable income.
What the Means Test Actually Measures
The bankruptcy means test serves one primary purpose: it figures out whether you have enough disposable income to repay your debts. Congress created this test in 2005 to prevent abuse of the bankruptcy system by people who could actually afford to pay their creditors.
The Two-Part Process
Think of the means test as a two-stage filter. The first stage is simple – it compares your income to your state’s median. If you earn less than the median for your household size, you pass automatically. This happens in about 90% of cases, making it the most common outcome.
The second stage only applies if you earn more than the median. Here, the test gets more detailed. You’ll subtract allowed expenses from your income to calculate disposable income. If what remains isn’t enough to pay back a meaningful amount to creditors over five years, you can still qualify for Chapter 7.
Why Income Periods Matter
The test uses your past six months of income, not just your current paycheck. This averaging approach accounts for seasonal work, bonuses, or fluctuating income. If you recently lost a job or took a pay cut, waiting a few months before filing might help you pass the test.
The Disposable Income Threshold
When calculating disposable income, the law sets specific thresholds. If your monthly disposable income multiplied by 60 months is less than $8,175, you pass. If it’s more than $13,650, you fail. Between these amounts, it depends on whether you could repay at least 25% of your unsecured debts.
Chapter 7 vs. Chapter 13: Which Path to Take?
| Aspect | Chapter 7 | Chapter 13 |
|---|---|---|
| Duration | 3-4 months | 3-5 years |
| Debt Discharge | Most debts eliminated immediately | Debts paid through repayment plan |
| Asset Protection | Non-exempt assets may be sold | Keep all assets |
| Income Requirement | Must pass means test | Must have regular income |
| Home Foreclosure | Cannot stop permanently | Can catch up on missed payments |
| Best For | Low income, few assets | Higher income, saving home |
Frequently Asked Questions
Common Mistakes to Avoid
Miscounting Household Size
One frequent error is incorrectly counting household members. Your household includes anyone who depends on your income, not just family members. Roommates who pay their own way don’t count, but children, elderly parents you support, and non-working spouses all do. Getting this number wrong can significantly impact your median income threshold.
Forgetting Income Sources
People often overlook smaller income sources. That side gig bringing in $200 a month? It counts. Rental income from that property you inherited? Include it. Regular gifts from family members? Those count too. The test requires you to disclose all income, and missing sources can cause problems if discovered later.
Using the Wrong Time Period
The means test specifically requires your income from the past six calendar months before filing. Some people mistakenly use their current monthly income or an annual average. If your income fluctuates, using the wrong period can lead to an incorrect calculation and potentially a dismissed case.
Mixing Up Gross and Net Income
Always use gross income before taxes and deductions for the means test calculation. Your take-home pay is lower, but that’s not what the test measures. Tax withholdings and deductions get accounted for separately in the expense section if you need to complete that part.
References
- United States Courts. “Official Bankruptcy Forms.” Administrative Office of the United States Courts. Available at: https://www.uscourts.gov/forms/bankruptcy-forms
- U.S. Department of Justice. “Means Testing.” United States Trustee Program. Available at: https://www.justice.gov/ust/means-testing
- United States Courts. “Chapter 7 – Bankruptcy Basics.” Available at: https://www.uscourts.gov/services-forms/bankruptcy/bankruptcy-basics/chapter-7-bankruptcy-basics
- Legal Information Institute. “11 U.S. Code § 707 – Dismissal of a case or conversion to a case under chapter 11 or 13.” Cornell Law School. Available at: https://www.law.cornell.edu/uscode/text/11/707
- U.S. Census Bureau. “Income and Poverty in the United States.” United States Census Bureau, published annually.