The Bankruptcy Means Test: Income Gates and Eligibility Thresholds

The bankruptcy means test decides whether you qualify to file Chapter 7 by comparing your income against your state’s median and, if you earn more, running your deductions and debts through a formula that determines whether you have enough disposable income to repay creditors. You pass at the first step if your income is at or below the median for a household your size. If it’s above, you move into a detailed calculation, and two dollar thresholds ($10,275 and $17,150 over sixty months, adjusted in April 2025) decide whether the court presumes your filing is an abuse of the system.¹

Who the Test Applies To

The means test only applies when your debts are primarily consumer debts: credit cards, medical bills, car loans, mortgages on a personal residence. If most of what you owe came from running a business, the test does not enter your Chapter 7 filing at all.² Above-median earners with business-related debt often assume they’re locked out of Chapter 7 when the formula never touches them.

Two groups of consumer debtors also skip the test. Disabled veterans with a Department of Veterans Affairs rating of at least 30 percent are exempt when their debts were primarily incurred during active duty or homeland defense service. National Guard and Reserve members who served at least 90 days of active duty after September 11, 2001 are exempt during their service and for 540 days after release.³

The First Gate: Your Income Versus the State Median

Everyone else starts by calculating “current monthly income.” That’s your average gross monthly income from all sources over the six full calendar months before you file: wages, business revenue, rental income, interest, dividends, pensions, and regular financial contributions from other people toward your household expenses. Joint filers include both spouses’ income regardless of who is filing.⁴

Several income sources are excluded outright. Social Security benefits of any kind don’t count, which matters for retirees and disabled filers whose income looks high on paper. Payments to victims of war crimes or terrorism are excluded. So are military disability compensation, combat-related pay, and survivor benefits paid under federal military statutes.⁵

When only one spouse files but the couple lives together, the non-filing spouse’s income goes into the initial calculation. You then subtract the portion of that income that doesn’t go toward household expenses: separate student loans, support obligations to another household, debt payments on property you have no interest in. This “marital adjustment” appears on the official forms and can matter substantially for couples with one high earner carrying separate obligations.

Multiply your current monthly income by twelve. Compare that annualized figure to the median for your state and household size, published by the Department of Justice’s U.S. Trustee Program using Census Bureau data. The tables are updated multiple times a year, most recently with adjustments taking effect in April and November.⁶ At or below the median, you pass. No further calculation. Most Chapter 7 filers clear this first hurdle. Above the median, you don’t fail; you move to the deduction analysis.

Why the Six-Month Window Matters

The lookback captures the six full calendar months before your filing date, not the six months before you decided to file. A one-time bonus, a seasonal spike in self-employment revenue, or a few months of overtime can inflate your average well above what you normally earn. If you recently lost a job or had your hours cut, waiting a few months can let the high-earning months drop out of the window. The test is a backward-looking snapshot and doesn’t care what you’ll earn next month.

The Second Gate: Deductions and Disposable Income

If your income exceeds the median, you complete Official Form 122A-2, which walks through allowable deductions.⁷ The law substitutes standardized IRS amounts for many everyday categories, which prevents padded budgets but also means you get the standard figure even when your real spending is lower.

IRS National Standards cover food, clothing, housekeeping supplies, personal care, and miscellaneous expenses at fixed monthly amounts by household size: $839 for a single person, $2,129 for a family of four.⁸ A separate out-of-pocket healthcare allowance applies. Local Standards handle housing, utilities, and transportation, and they vary by county. Housing includes mortgage or rent plus related costs like insurance. Transportation splits into ownership costs and operating expenses, with different figures based on how many vehicles you have and whether they’re financed. In high-cost areas, the local numbers drive the largest deductions.

Beyond the standardized figures, actual costs can be deducted for mandatory payroll items (taxes, retirement contributions), term life insurance premiums, court-ordered obligations like child support and alimony, and care for elderly or chronically ill household members. Expenses for protection against domestic violence also qualify. Education costs for dependent children under 18 in elementary or secondary school are deductible up to $189.58 per child per month, adjusted every three years.⁹ Regular charitable or religious contributions are protected as well; the bankruptcy code bars courts from treating them as evidence of abuse.²

Subtracting all allowed deductions from your current monthly income gives your monthly disposable income. That is the number the law treats as available to repay unsecured creditors.

The Dollar Thresholds That Decide Eligibility

Multiply your monthly disposable income by sixty, representing a five-year repayment period, and compare the result against two thresholds. As of April 2025, the figures are $10,275 and $17,150, and they apply to all cases filed in 2026.¹

Below $10,275, there is no presumption of abuse. You qualify for Chapter 7 regardless of your debt level.
Above $17,150, the presumption of abuse applies automatically unless you can rebut it with special circumstances.
Between $10,275 and $17,150, the presumption depends on your total unsecured debt. If your sixty-month disposable income could pay at least 25 percent of your nonpriority unsecured debts, the presumption kicks in. If not, you pass.¹⁰

The middle zone is where the math gets personal. Two filers with identical disposable income can land differently depending on how much unsecured debt they carry. Someone with $60,000 in credit card debt faces a 25 percent target of $15,000; someone with $30,000 in debt only needs to clear $7,500. The same disposable income can trigger the presumption for one and not the other.

Rebutting the Presumption

Triggering the presumption doesn’t end the case. You can rebut it by showing “special circumstances” that justify expenses or income adjustments the standard formula doesn’t capture. The statute names two examples: a serious medical condition and a call or order to active military duty.¹¹

The standard is demanding. You must itemize each additional expense or income adjustment, provide documentation, and submit a detailed written explanation of why the expense is necessary and has no reasonable alternative, all signed under oath. If those additions bring your sixty-month total below the applicable threshold, the presumption is rebutted and you proceed with Chapter 7. A sympathetic story alone doesn’t carry the day; courts expect concrete numbers backed by receipts and records.

If the presumption stands, you have two options: convert voluntarily to Chapter 13 and commit your disposable income to a repayment plan, or have the Chapter 7 case dismissed.¹²

Forms and Documentation

The test uses two forms. Official Form 122A-1 reports your current monthly income and compares it to the state median; if you fall below, that’s the only form you need. Above the median, you also complete Official Form 122A-2 for the full deduction analysis and disposable income figure.⁷

To fill them out you need six months of pay stubs, records of any other income (rental payments, business revenue, investment returns, support received), and documentation of the actual expenses that aren’t standardized. Joint filers include both spouses’ income even when only one is filing. Figures on the forms must match the supporting documents you give the trustee. Discrepancies delay cases at a minimum.

Consequences of Misreporting

The forms are signed under penalty of perjury, and the bankruptcy trustee reviews them against your supporting documents. Honest mistakes generally get corrected. Concealing income, hiding assets, or falsifying records in a bankruptcy case is a federal crime carrying up to five years in prison.¹³ Short of prosecution, a court that finds dishonest reporting can dismiss the case, deny the discharge, and bar refiling. Losing the discharge means you went through the process, spent the money, and still owe everything.

1
Federal Register. Adjustment of Certain Dollar Amounts Applicable to Bankruptcy Cases
2
Office of the Law Revision Counsel. 11 U.S. Code 707 – Dismissal of a Case or Conversion to a Case Under Chapter 11 or 13
3
Office of the Law Revision Counsel. 11 U.S. Code 707 – Dismissal of a Case or Conversion to a Case Under Chapter 11 or 13 – Section 707(b)(2)(D)
4
Office of the Law Revision Counsel. 11 U.S. Code 101 – Definitions
5
Office of the Law Revision Counsel. 11 U.S. Code 101 – Definitions – Section 101(10A)(B)(ii)
6
United States Department of Justice. Means Testing
7
United States Courts. Official Form 122A-1 – Chapter 7 Statement of Your Current Monthly Income
8
United States Department of Justice. IRS National Standards for Allowable Living Expenses
9
United States Courts. Official Form 122A-2 – Chapter 7 Means Test Calculation
10
Office of the Law Revision Counsel. 11 U.S. Code 707 – Dismissal of a Case or Conversion to a Case Under Chapter 11 or 13 – Section 707(b)(2)(A)(i)
11
Office of the Law Revision Counsel. 11 U.S. Code 707 – Dismissal of a Case or Conversion to a Case Under Chapter 11 or 13 – Section 707(b)(2)(B)
12
United States Courts. Chapter 13 – Bankruptcy Basics
13
Office of the Law Revision Counsel. 18 U.S. Code 152 – Concealment of Assets; False Oaths and Claims; Bribery