How to Qualify for Bankruptcy: Means Test and Chapter 13 Debt Caps

To qualify for bankruptcy, you need to meet the eligibility rules for the chapter you plan to file under, finish a pre-filing credit counseling course, and submit a complete petition with the supporting schedules and filing fee. For Chapter 7, that means passing a means test tied to your state’s median income. For Chapter 13, it means having regular income and total debts under the statutory caps. Both chapters share the same paperwork and counseling requirements, and both bar you from a discharge if you’ve filed too recently.

Chapter 7 Income Eligibility: The Means Test

Chapter 7 uses a screening tool called the means test to decide whether wiping out your debts would count as an abuse of the bankruptcy system.¹ The starting point is your average gross monthly income over the six full calendar months before you file. If that average is at or below the median income for a household of your size in your state, you pass, and you can proceed with Chapter 7.

If your income exceeds the median, the test moves to a second step. The court subtracts allowable expenses — housing, transportation, food, health insurance, childcare, and other necessities — using a mix of IRS expense standards and your actual costs.¹ What’s left is your disposable income, multiplied by 60 to represent five years of payments. If that total clears a statutory threshold, the court presumes you could pay a meaningful portion of your debts through a Chapter 13 plan, and your Chapter 7 case will likely be dismissed or converted.

You can still try to overcome that presumption by showing special circumstances that raise your expenses or cut your earning capacity, such as a serious medical condition or a military deployment. The court weighs those arguments case by case.

Chapter 13 Eligibility: Regular Income and Debt Caps

If your income is too high for Chapter 7, or you want to keep property while repaying creditors over time, Chapter 13 is the alternative. To qualify, you need a regular source of income sufficient to fund monthly payments under a court-approved plan. That income can be wages, self-employment earnings, pension payments, or other steady funds.² The plan itself runs three years if your income is below the state median and five years if it’s above.³

Chapter 13 also caps how much debt you can bring in. Your total unsecured debts (credit cards, medical bills, personal loans) cannot exceed $526,700, and your total secured debts (mortgages, car loans) cannot exceed $1,580,125.³ Above those numbers, Chapter 13 is closed to you, and Chapter 11 becomes the remaining option.

The Mandatory Credit Counseling Requirement

Regardless of chapter, you have to complete a credit counseling session within the 180 days before you file your petition.² The session has to come from a nonprofit agency approved by the United States Trustee Program, or the Bankruptcy Administrator in Alabama and North Carolina.⁴ A counselor reviews your finances, helps you sketch a budget, and walks through alternatives to bankruptcy. Sessions are typically 60 to 90 minutes, can be done by phone or online, and generally cost $10 to $50. Ask the agency about a waiver if you can’t pay.

The agency issues a certificate of completion when you finish, and that certificate has to be filed with your petition. Without it, the court will reject your case. In a true emergency, you can request an extension of up to 30 days to complete the counseling after filing, or 45 days for cause.²

Documents and Forms You Have to Produce

A bankruptcy filing turns on thorough financial disclosure. Before you touch the court forms, gather:

Tax returns for the previous two years and pay stubs from the last six months
Monthly cost figures for housing, utilities, food, insurance, transportation, and childcare
A full asset inventory: real estate, vehicles, bank accounts, retirement accounts, household goods, and any other property
A full debt inventory with account numbers, balances, and a note on whether each debt is secured by collateral

The main court document is Official Form 101, the Voluntary Petition for Individuals Filing for Bankruptcy.⁵ It records your identifying information and which chapter you’re filing under. Alongside the petition, you submit several supporting schedules:

Schedule A/B, listing all property you own or hold an interest in
Schedule C, identifying the property you claim as exempt from liquidation
Schedules D and E/F, categorizing your debts as secured, priority, or general unsecured
Schedule I, detailing your current monthly income from all sources
Schedule J, itemizing your monthly expenses

Every schedule is signed under penalty of perjury. False information or hidden assets can trigger denial of your discharge, fines of up to $250,000, or imprisonment of up to 20 years.⁵

Filing Fees and Waivers

You file the completed paperwork with the bankruptcy court in your federal judicial district. Many courts accept electronic filings. The filing fee is $338 for a Chapter 7 case and $313 for a Chapter 13 case. If you can’t afford the Chapter 7 fee, you can submit Official Form 103B to ask the court to waive it.⁶ Both chapters also allow you to pay in installments.

Attorney fees are separate. Chapter 7 representation typically runs between $800 and $4,500 depending on the complexity of your case and where you live. Chapter 13 attorney fees are often folded into the repayment plan. You can file on your own, called filing pro se, but the process is complicated enough that free legal aid may be a better route if cost is the concern.

Waiting Periods If You’ve Filed Before

A prior bankruptcy can disqualify you from getting a discharge in a new one for years. The waiting period depends on which chapters are involved, and it runs from the earlier filing date, not the earlier discharge date:⁷

Chapter 7 after a prior Chapter 7: eight years
Chapter 13 after a prior Chapter 7: four years
Chapter 7 after a prior Chapter 13: six years, unless the earlier plan paid 100% of unsecured claims, or paid at least 70% and was proposed in good faith
Chapter 13 after a prior Chapter 13: two years

You can technically file a new case before the waiting period is up, but the court won’t grant you a discharge in it until the required time has passed.

Debts That Won’t Be Wiped Out Even If You Qualify

Qualifying to file is not the same as clearing every debt. Federal law carves out categories that survive a discharge in either chapter, so a filing built around one of them may not give you what you’re looking for.⁸ Domestic support obligations like child support and alimony stay. Most student loans stay, unless you can prove undue hardship, a difficult standard. Recent income taxes and taxes tied to unfiled or fraudulent returns stay. Debts from fraud, from willful injury, and from DUI-related death or injury stay, as do criminal fines and most government penalties.

The court also scrutinizes last-minute spending. Purchases of luxury goods or services totaling more than $900 from a single creditor within 90 days of filing are presumed nondischargeable, and the same goes for cash advances over $1,250 taken within 70 days of filing.⁸ Groceries and medical expenses don’t count as luxury goods under this rule.

1
Office of the Law Revision Counsel. 11 USC 707 – Dismissal of a Case or Conversion to a Case Under Chapter 11 or 13
2
Office of the Law Revision Counsel. 11 U.S. Code 109 – Who May Be a Debtor
3
United States Courts. Chapter 13 – Bankruptcy Basics
4
U.S. Courts. Credit Counseling and Debtor Education Courses
5
Bankruptcy Court. Official Form 101 Voluntary Petition for Individuals Filing for Bankruptcy
6
United States Courts. Application to Have the Chapter 7 Filing Fee Waived
7
Office of the Law Revision Counsel. 11 U.S. Code 727 – Discharge
8
Office of the Law Revision Counsel. 11 U.S. Code 523 – Exceptions to Discharge