Chapter 7 Means Test: The 6-Step Process That Decides Your Case

The Chapter 7 means test is a gatekeeper. Pass it, and you can wipe out credit card debt, medical bills, and personal loans in 3-4 months. Fail, and the bankruptcy court pushes you into Chapter 13, where you repay creditors for three to five years.

Roughly 96% of Chapter 7 filers pass the means test. But that 4% who don't often had no idea it was coming. The test is mechanical. You plug in numbers, and the formula spits out a yes or no. If you know what counts and what doesn't, you can prepare. If you're close to the line, timing when you file can make the difference.

What the Means Test Actually Measures

The test answers one question: Do you have enough leftover income to repay a meaningful chunk of debt? It looks at your gross income over the past six months and subtracts allowed expenses. If the number left over is too high, the court says you have the means to pay creditors something. That forces you into Chapter 13 or blocks bankruptcy altogether.

Congress added the means test in 2005 to stop high earners from abusing Chapter 7. The theory was that people with stable incomes shouldn't get a free pass on debt if they can afford to pay. The reality is messier. The test uses rigid income caps and IRS expense guidelines that don't always match real life. A nurse making $55,000 in California might pass. The same nurse in Ohio might not.

Step 1: Calculate Your Six-Month Income

The test doesn't care what you earn this week or last month. It looks backward at the six full calendar months before the month you file. If you file bankruptcy on June 15, your calculation window runs from December 1 through May 31.

Start with gross income before any deductions. That includes:

• Wages and salary
• Self-employment income or business revenue
• Rental property income
• Unemployment benefits
• Alimony or child support
• Regular contributions from a partner, roommate, or family member
• Social Security retirement or pension payments

You exclude Social Security Disability Insurance (SSDI), Supplemental Security Income (SSI), and certain veterans benefits under the HAVEN Act. If you receive disability through Social Security, that income is invisible to the means test. Same with VA disability or combat pay.

Once you have the six-month total, divide by six to get your monthly average. Then multiply by 12 to annualize it. That annualized number is what you compare against your state's median.

Why the Six-Month Window Matters

A bonus, tax refund, or one-time payment can push you over the limit if it lands in that six-month lookback. Say you earned $45,000 last year but got a $10,000 severance in March. If you file in April, that severance counts. Your annualized income jumps to $65,000, even though you're now unemployed. Wait until October, and the severance falls outside the window.

Some filers wait strategically. If you know a big payment is coming or your income just dropped, delaying by a month or two can mean the difference between qualifying and getting shut out.

Step 2: Compare Your Income to Your State's Median

Every state has a published median income for households of different sizes. The U.S. Trustee updates these numbers twice a year. You can find the current figures at justice.gov/ust/means-testing.

If your annualized income is below the median for your household size in your state, you pass. Done. You qualify for Chapter 7, and you don't touch the rest of the test.

As of 2025, here are sample medians for a household of two:

• California: $89,643
• Texas: $73,209
• Florida: $67,431
• Ohio: $66,990
• New York: $82,688

If your income is above the median, you move to the expense calculation. This is where the test gets granular.

Step 3: Subtract Allowed Expenses

The second part of the means test subtracts specific expenses from your income to calculate disposable income. These aren't your actual monthly bills. The test uses IRS standards for most categories, then lets you add certain real expenses on top.

National Standards for Food, Clothing, and Household Supplies

The IRS publishes a monthly allowance based on household size. For 2025, a two-person household gets $939. A four-person household gets $1,372. You can't claim more than the standard, even if you spend more.

Local Standards for Housing and Utilities

This depends on your county. The IRS sets caps on housing and utility costs. If you rent or have a mortgage, you claim the actual amount you pay up to the local cap. If you own your home outright, you still get to claim a portion of the standard for utilities and maintenance.

Transportation Expenses

You get two categories here: ownership costs and operating costs. Ownership includes your car payment and insurance. Operating costs cover gas, maintenance, and registration. The IRS caps vary by region for operating costs, but actual loan and insurance payments count as long as they're reasonable.

Other Expenses You Can Deduct

• Taxes withheld from your paycheck
• Mandatory retirement contributions
• Court-ordered payments like child support or alimony
• Childcare costs
• Out-of-pocket health insurance premiums
• Term life insurance
• Care for elderly or disabled family members
• Education expenses for physically or mentally challenged children

Secured debt payments — like a mortgage or car loan , get subtracted separately. So do priority debts like back taxes or overdue child support. Credit card minimum payments do not count. The test assumes those debts will be discharged.

Step 4: Calculate Disposable Income

Once you subtract all allowed expenses, you're left with monthly disposable income. Multiply that by 60. That gives you the total amount of money the court estimates you could pay to unsecured creditors over five years.

If that number is less than $9,075, you pass the means test. If it's more than $15,150, you fail. If it falls between those two figures, the court compares it to your total unsecured debt. If your disposable income would pay back less than 25% of that debt, you still qualify.

What Happens If You Don't Pass

Failing the means test doesn't end your bankruptcy options. It just closes the door to Chapter 7. You can file Chapter 13 instead, which requires a three- or five-year repayment plan.

Chapter 13 isn't always worse. If you're behind on a mortgage or car loan, it can stop foreclosure or repossession and give you time to catch up. The downside is the length. You pay the trustee every month for years, and if you miss payments, the case gets dismissed.

In rare cases, a debtor can challenge the means test result by arguing special circumstances. Maybe you have a serious medical condition that requires ongoing treatment not covered by the standard deductions. Maybe you're supporting an aging parent. These arguments work, but they require documentation and sometimes a hearing.

How To Improve Your Odds of Passing

Most people who fail the means test could have passed with different timing or preparation. Here's what helps:

Wait Out One-Time Income Spikes

If you received a bonus, inheritance, or tax refund in the past six months, delay filing until it drops out of the calculation window. A few months can change the result.

Make Sure You're Claiming All Allowed Expenses

People routinely forget to claim childcare, medical premiums, or union dues. If you have a car loan and pay for gas and insurance, claim both the ownership and operating costs. Every legitimate expense reduces your disposable income.

File Jointly If You're Married

If your spouse has little or no income, filing jointly increases your household size, which raises the median income threshold. Even if your spouse doesn't want to file, their income might still count on the means test if you file alone. Talk to a bankruptcy attorney before deciding.

Check Your State's Median Before You Assume You're Over

Medians shift every April and November. If you calculated your income six months ago, check the current numbers. You might now be below the line.

Where the Means Test Trips People Up

Two mistakes happen over and over:

Forgetting irregular income. If someone gave you $500 twice during the six-month period, that's $1,000 of income. It doesn't matter if it wasn't a paycheck. Regular help from a roommate, parent, or partner counts.

Using the wrong month. The lookback starts the month before you file. If you file on March 1, your calculation runs from August 1 to January 31. If you file on March 31, it's the same window. But if you file on April 1, the window shifts to September 1 through February 28. One day changes the numbers.

Can You File Chapter 7 Without Taking the Means Test?

Yes, but only if your debt is primarily business-related. If more than 50% of your debt came from running a business, the means test doesn't apply. This is rare but useful for solo entrepreneurs or contractors who took on debt to keep the business afloat.

You still have to prove to the court that Chapter 7 is appropriate. If you're above the median and your business debt is less than half your total, you're taking the test.

How To File If You Pass the Means Test

Once you know you qualify, filing Chapter 7 involves filling out bankruptcy forms, attending credit counseling, submitting documentation, and showing up to a 341 meeting with the trustee. Most people without complex assets or business income can handle it on their own using free tools.

If you're eligible based on income, you can check if you qualify to file online with help from our free tool. You'll answer questions about your debts, assets, and situation, and if you're a fit, you'll get step-by-step guidance through the forms.

If you're above the median and relying on the expense calculation to pass, consider consulting a bankruptcy attorney. The second part of the means test has more room for error, and a mistake can delay your case or trigger a challenge from the trustee.

The Bottom Line

The Chapter 7 means test is designed to be passable for most people who genuinely can't afford their debt. If your income is below your state's median, you're in. If it's above, careful documentation of your expenses usually gets you over the line. The key is understanding what counts, when to file, and how to maximize your allowed deductions. Get those pieces right, and the test stops being an obstacle.