The Bankruptcy Means Test: Income, Expenses, and Qualifying

The bankruptcy means test is the formula that decides whether you can file Chapter 7 and wipe out your debts or whether your income is high enough that the court will push you into a Chapter 13 repayment plan instead. It works in two stages: first it compares your average income to the median for your state and household size, and if you’re above that median it then subtracts a long list of allowed expenses to see what you could theoretically pay creditors over five years. If that five-year disposable income figure comes in under $10,275, the law presumes you qualify for Chapter 7; if it exceeds $17,150, the law presumes you don’t.¹

Who Actually Has to Take It

The test only applies to individuals filing Chapter 7 whose debts are primarily consumer debts: credit cards, medical bills, personal loans, car loans, and the like. If more than half of what you owe comes from running a business, you skip the full calculation and file Form 122A-1Supp to claim the exemption.²

Two groups of military filers are also exempt. Disabled veterans whose debts were mostly incurred during active duty or a homeland defense activity do not have to take the test at all. National Guard members and reservists called to active duty after September 11, 2001, for at least 90 days are exempt during their service and for 540 days after release.²

Everyone else with consumer debt starts with the income calculation.

Step One: Your Current Monthly Income

“Current monthly income” is a term of art and does not mean what you earned last month. It is the average of your gross income from every source over the six full calendar months before the month you file. File on July 15 and the court looks at January through June. Add up wages, self-employment earnings, rental income, pensions, investment returns, and regular contributions anyone else makes toward your household expenses.²

Social Security benefits are excluded, as are payments to victims of terrorism and war crimes.² That exclusion matters enormously for retirees; a filer living mainly on Social Security can clear the test easily even with substantial benefits coming in.

If you’re married and filing alone, your spouse’s income still counts. That catches many people off guard. You can subtract the portion of your spouse’s income that goes to their own personal expenses rather than shared household costs: a car payment on a vehicle only they drive, student loans in their name, payroll deductions from their check. This “marital adjustment” lives on Part 1 of Form 122A-2 and can meaningfully reduce the income number the court measures.

Step Two: Compare It to the State Median

Take your average monthly income, multiply by 12, and match the result against the median for your state and household size. The U.S. Trustee Program publishes those medians using Census Bureau data, and the applicable table depends on when you file.³

The numbers vary a lot by state. For cases filed between November 2025 and March 2026, the median income for a single earner runs from roughly $62,700 in Alabama to about $77,200 in California. A household of four in Texas has a median around $114,900; the same household in New York, roughly $135,500. Each additional person beyond four adds about $11,100.⁴

If your annualized income falls below the median, you pass. Report the result on Form 122A-1 and you’re done; no expense calculation required. This is where most filers who qualify for Chapter 7 stop.

Step Three: The Expense Calculation

Filers above the median move to Form 122A-2 and the real math. Many of the deductions are standardized IRS amounts rather than your actual spending. The point is to measure what you could theoretically pay toward debt, not what you actually spend.

IRS National Standards

Food, clothing, housekeeping supplies, and personal care use fixed IRS National Standards based on household size and income. The figures come from the Bureau of Labor Statistics Consumer Expenditure Survey, and the current set applies through June 2026.⁵ You claim the standard amount whether your real spending is higher or lower.

IRS Local Standards

Housing and transportation use IRS Local Standards that vary by county. Housing covers rent or mortgage plus utilities; transportation covers ownership and operating costs based on how many vehicles your household has.⁶ For housing you claim the local standard or your actual cost, whichever is less, then subtract what you already pay toward secured debts like a mortgage, because that payment gets its own deduction line.

Actual Expenses

On top of the standards, the test allows deductions for several categories of real out-of-pocket spending:

Payroll withholdings for federal and state income tax, Social Security, Medicare, and mandatory retirement contributions.
Health insurance and disability insurance premiums.²
Childcare and dependent care, including care for dependents with special needs, provided you can document the cost.
Secured debt payments. Your total contractual obligations on mortgages and car loans get averaged over 60 months and deducted, regardless of whether the monthly amount changes during that period.
Priority debts like back taxes and past-due child support, also divided by 60 and deducted.
Care of elderly family members and unusually high medical expenses.

These deductions often decide the case. The gap between failing and passing frequently comes down to whether a filer identifies every allowable expense.

How the Final Number Decides Your Case

Subtract every allowed deduction from current monthly income and you’re left with monthly disposable income. Multiply by 60 (the five-year window) and the result places you in one of three zones:¹

Under $10,275 over 60 months (roughly $171 a month or less): no presumption of abuse, and you can proceed with Chapter 7.
Over $17,150 over 60 months (roughly $286 a month or more): the law presumes your filing is abusive, and you don’t qualify for Chapter 7 unless you rebut the presumption.
Between $10,275 and $17,150: a secondary calculation decides it. If the 60-month total equals at least 25 percent of your nonpriority unsecured debt, the presumption kicks in. If it’s less than 25 percent, you pass.²

These thresholds were adjusted on April 1, 2025, and are scheduled for their next update in 2028.¹ Older copies of Form 122A-2 still show the previous figures of $9,075 and $15,150, so confirm your form reflects the current numbers.

If the Presumption of Abuse Arises

Triggering the presumption is not the end of a Chapter 7 case. The statute lets you rebut it by showing “special circumstances” that justify an expense or income adjustment the formula doesn’t capture. The law names two examples: a serious medical condition and a call to active military duty. Courts have accepted others that create unavoidable financial hardship.²

The bar is real. You have to document the specific expense or income adjustment, explain why no reasonable alternative exists, and quantify the amount. Vague hardship claims without records won’t move a trustee. Part 4 of Form 122A-2 is where you make that case in writing.

If You Fail the Test

A failed means test leaves you with a few paths. The common one is converting to Chapter 13, where you repay a portion of your debts over three to five years and discharge the rest.⁷ For many filers that’s still meaningful debt relief.

Before you accept the result, re-examine the calculation. The six-month lookback can distort things badly if your income recently dropped; a job loss two months before filing may not pull the average down far enough. Waiting a month or two so the high-earning months fall outside the window can flip the outcome. Filers also routinely miss deductions like health insurance premiums, union dues, or elder care costs. Catching one missed line can shift everything.

The Forms You File

The means test paperwork goes in with your initial petition. Three forms do the work:

Form 122A-1 calculates current monthly income and compares it to the state median.
Form 122A-1Supp claims an exemption, whether for non-consumer debt, disabled veterans, or qualifying military service.
Form 122A-2 handles the full expense calculation when your income is over the median.

All three are available from the U.S. Courts website through the U.S. Trustee’s means testing page.³ After filing, the U.S. Trustee reviews your numbers and can move to dismiss your case or convert it to Chapter 13 if a presumption of abuse appears. The trustee will cross-reference what you reported against pay stubs, tax returns, and bank statements, so every deduction needs backup.

1
Federal Register. Adjustment of Certain Dollar Amounts Applicable to Bankruptcy Cases
2
Office of the Law Revision Counsel. 11 USC 707 – Dismissal of a Case or Conversion to a Case Under Chapter 11 or 13
3
United States Department of Justice. Means Testing
4
U.S. Trustee Program. Census Bureau Median Family Income By Family Size
5
Internal Revenue Service. National Standards: Food, Clothing and Other Items
6
Internal Revenue Service. Collection Financial Standards
7
United States Courts. Chapter 13 – Bankruptcy Basics