A bankruptcy court can dismiss a Chapter 7 case under 11 U.S.C. 707 on two separate tracks: Section 707(a) covers procedural failures like missing documents, unpaid fees, or unreasonable delay that harms creditors, and Section 707(b) targets consumer debtors whose income is high enough that wiping out their debts in Chapter 7 would be an abuse of the system. The 707(b) track runs mostly through the means test. Dismissal can be requested by the U.S. Trustee, the Chapter 7 trustee, any party in interest, or raised by the court on its own.
Procedural Dismissal Under Section 707(a)
Section 707(a) lets the court dismiss “for cause.” The statute names three grounds, and the word “including” tells courts they can recognize others.
- Unreasonable delay by the debtor that is prejudicial to creditors. Stalling on records, ignoring court orders, or otherwise dragging the case out can qualify.
- Nonpayment of required filing fees, including missed installments.
- Failure to file the schedules and other documents required under 11 U.S.C. 521(a)(1) within 15 days of the petition, unless the court grants more time. That package includes schedules of assets and liabilities, a schedule of current income and expenses, a statement of financial affairs, and copies of pay stubs from the prior 60 days.
One ground isn’t in the statute but is enforced routinely: not showing up to the meeting of creditors (the 341 meeting). You must appear, present identification, and answer questions under oath. Skip it and the case gets dismissed.
Dismissal for Abuse Under Section 707(b)
Section 707(b) applies only to individual debtors whose debts are primarily consumer debts — those incurred for personal, family, or household purposes. If granting Chapter 7 relief would be an abuse, the court can dismiss outright or, with the debtor’s consent, convert the case to Chapter 11 or Chapter 13.
A motion can be filed by the court, the U.S. Trustee, the Chapter 7 trustee, or any party in interest. Abuse is evaluated three ways: the means test (which creates a presumption of abuse by formula), a bad-faith inquiry, and a totality-of-the-circumstances review of the debtor’s financial situation.
How the Means Test Decides Chapter 7 Eligibility
The means test is the main screen. It compares your income to your state’s median and, if your income is above the line, calculates whether you have enough disposable income left to fund a repayment plan.
Step One: Current Monthly Income Against the State Median
“Current monthly income” is the average of your income from all sources over the six full calendar months before filing. That figure is compared to the median family income for a household of your size in your state, using Census Bureau data that updates periodically. If you fall at or below the state median, you pass. No presumption of abuse arises and the formula inquiry generally stops.
Step Two: Allowed Expenses
If your income is above the state median, you move to the expense calculation. You don’t get to use your actual spending. The formula substitutes standardized IRS amounts for five national categories — food, clothing, housekeeping supplies, personal care, and miscellaneous items — plus local standards for housing, utilities, and transportation based on where you live.
On top of those, the formula allows additional deductions for:
- Secured debt payments, averaged monthly across the 60 months after filing (mortgages, car loans, and similar).
- Priority claims such as child support and alimony, calculated as the total priority debt divided by 60.
- Reasonably necessary health and disability insurance premiums and health savings account expenses.
- Up to $2,575 per year per dependent child under 18 for elementary or secondary school.
- Expenses for an elderly, chronically ill, or disabled household member or immediate family member.
- Costs reasonably necessary to protect the debtor and family from family violence.
- If you’d be eligible for Chapter 13, up to 10 percent of projected plan payments for administrative costs.
The dollar figures in the means test are adjusted every three years. The amounts above reflect the April 1, 2025 adjustment and stay in effect through at least early 2028.
Step Three: The 60-Month Disposable Income Threshold
Subtract the allowed expenses from your current monthly income. Multiply the remainder by 60 to project disposable income over five years. A presumption of abuse arises if that total is at least the lesser of:
- 25 percent of your nonpriority unsecured debts, or $10,275, whichever is greater; or
- $17,150.
In plain terms: if your projected five-year disposable income reaches $17,150, the presumption always arises regardless of how much unsecured debt you carry. Between $10,275 and $17,150, it depends on your unsecured debt load. Below $10,275, the formula raises no presumption.
Rebutting the Presumption
Once the presumption exists, the burden shifts to you. You can rebut it only by showing “special circumstances” that justify additional expenses or income adjustments and leave no reasonable alternative. The statute gives two examples: a serious medical condition and a military call to active duty. You have to itemize each special circumstance, provide documentation, and show that the adjustment is large enough to bring your disposable income below the threshold.
Bad Faith and Totality of Circumstances
Even if the means test produces no presumption, or you rebut it, the court can still dismiss under Section 707(b)(3). That subsection asks whether the debtor filed in bad faith or whether the totality of the debtor’s financial circumstances shows abuse.
The statute lists no specific bad-faith factors. Courts have developed their own, and common red flags include filing to escape a single large judgment rather than genuine financial distress, transferring assets before filing, misrepresenting income or expenses, and running up debt with no intention to repay. The totality analysis is broader, weighing the debtor’s overall ability to repay outside the rigid formula, lavish spending patterns, and whether the debtor is trying to shed a personal services contract for financial reasons.
One carve-out matters here. The court cannot treat charitable contributions to a qualified religious or charitable organization as evidence that your filing is abusive.
Military and Veteran Exemptions From the Means Test
Section 707(b)(2)(D) takes certain service members and veterans out of means testing entirely. If you qualify, no form of the means test can be used to dismiss or convert your case.
- Disabled veterans as defined under 38 U.S.C. 3741(1) are exempt if their debts were incurred primarily while on active duty or performing a homeland defense activity.
- Reservists and National Guard members called to active duty or performing homeland defense activity after September 11, 2001, for at least 90 days, are exempt during that service and for 540 days after release or the end of the activity.
These exemptions reach only the means test. A qualifying service member’s case could still be dismissed for procedural failures under 707(a) or for bad faith under 707(b)(3), though in practice the bad-faith route is rare for them.
What Happens When Your Case Is Dismissed
The automatic stay ends the moment the case is dismissed. Everything it had frozen — lawsuits, wage garnishment, foreclosure, other collection — can resume immediately.
Dismissal Without Prejudice
Most procedural dismissals are without prejudice. You can refile once you fix the problem: gather the missing documents, pay the outstanding fees, and start again. There’s no mandatory waiting period for a without-prejudice dismissal, though correcting the underlying issue takes time.
The 180-Day Refiling Bar
Under 11 U.S.C. 109(g), you must wait 180 days before refiling under any chapter if your previous case was dismissed for either of two reasons: willful failure to obey court orders or appear before the court, or voluntarily dismissing your own case after a creditor filed a motion for relief from the automatic stay.
Shorter Automatic Stay for Repeat Filers
Refiling after a prior dismissal weakens the stay in the new case. If one prior case was dismissed within the past year, the automatic stay in your new case lasts only 30 days unless the court extends it on a showing of good faith. If two or more prior cases were dismissed within the past year, no stay takes effect at all unless the court affirmatively grants one. The burden is on you, and bad faith is presumed when prior cases were dismissed for failures like not filing required documents or not following through on a confirmed plan.
Converting Instead of Dismissing
In 707(b) abuse cases, the court often offers a choice: convert to Chapter 13 (or Chapter 11) rather than face outright dismissal. Conversion keeps the proceeding alive, preserves the automatic stay, and puts you into a three-to-five-year repayment plan funded by your disposable income. For many debtors who fail the means test, that’s the real outcome.