If you’re considering filing for bankruptcy, it’s important to understand the means test and how it works. The means test is a computation that decides if you meet the requirements for Chapter 7 or Chapter 13 bankruptcy, based on your income and outgoings. In this blog post, we’ll delve deeply into the means test and its implications.

You’ll learn about the different debts that are considered in the means test, including consumer debt and business debt. We’ll also cover how to fill out the means test form and provide examples of how the calculations work.

We’ll discuss some common misconceptions about the means test and explain why hiring a knowledgeable bankruptcy attorney can be crucial when navigating this process.

By understanding how the means test works, you can make informed decisions about filing for bankruptcy and determine which chapter is right for your situation. So let’s dive into everything you need to know about this important aspect of bankruptcy law!

What is the Bankruptcy Means Test?

The bankruptcy means test is a tool used by the court to determine if you qualify for Chapter 7 bankruptcy. This test helps the court decide whether you have enough disposable income left over each month to pay off your debts or if filing for Chapter 7 bankruptcy is necessary. The means test considers your household size, current monthly income, and certain allowable expenses.

To begin with, the means test compares your current monthly income (CMI) to that of other households in your state of similar size. If your CMI is lower than that of those households, then you pass the first part of the means test and can file for Chapter 7 bankruptcy protection without further qualification needed. If your CMI is higher than that of those households, then additional calculations must be made to determine eligibility for filing under Chapter 7.

Next, we subtract allowable living expenses from CMI, such as rent/mortgage payments; utility bills; food costs; transportation costs; childcare costs; medical expenses etc., all within limits set by federal guidelines or local standards depending on where you live. After subtracting these allowed expenses from CMI, what remains is called “disposable income” which must fall below a certain amount in order to qualify for Chapter 7 bankruptcy protection–otherwise known as passing the “means test” requirement.

Finally, there are some cases when even though an individual may not pass the means tests they can still file under Chapter 7 because of special circumstances like large medical bills or because their debt consists mostly of non-dischargeable taxes owed back taxes owing on business returns, etc. Sometimes, a judge may grant authorization for filing under Chapter 7 despite failing the means test if particular conditions are met, such as high medical costs or mostly non-dischargeable taxes due. Most people don’t fit into this category, so it is best practice to take care in passing the means test requirements before attempting any type of consumer bankruptcy filings.

The Bankruptcy Means Test is an important part of the process for determining whether a consumer filing for bankruptcy qualifies to file under Chapter 7 or 13. To understand how it works, let’s inspect How the Bankruptcy Means Test Works?


Key Takeaway: The bankruptcy means test is a tool used to determine if an individual qualifies for Chapter 7 protection. It considers current monthly income, allowable living expenses and other factors to find out whether there is enough disposable income left over each month after these deductions have been made in order to pass the ‘means test. Those who don’t qualify may still be able to file under special circumstances with approval from a judge.

How Does the Bankruptcy Means Test Work?

The test compares your income and expenses to see if you have enough disposable income left over after paying basic living expenses to pay back some of your debts through a Chapter 13 repayment plan.

They take income sources such as wages, unemployment benefits, alimony payments, Social Security funds and other regular revenues into consideration for the means test for the last half-year. This information is then compared against the median household incomes in your state as determined by the U.S. Census Bureau. They will consider your monthly income to determine if you qualify for Chapter 7 bankruptcy without further analysis.

Next up is an examination of allowable deductions such as medical bills and mortgage payments which can help reduce overall disposable income levels, making it easier to qualify for Chapter 7 bankruptcy protection. There are also certain federal limits on how much money can be deducted each month, so make sure that any deductions taken are within these guidelines before submitting them with the rest of your paperwork when filing for bankruptcy protection.

Creditors may dispute a debtor’s eligibility based on the discrepancies between what was reported on the means test and what they discover in their own records, such as credit card statements. Ultimately, it is up to the court system to determine who qualifies for bankruptcy protection by interpreting applicable laws governing bankruptcies in each state/jurisdiction; thus, even if you don’t pass muster initially, do not lose hope. Keywords: Bankruptcy Means Test, Disposable Income Limits, Creditor Challenge Eligibility.

The Bankruptcy Means Test is a complex and important tool for determining eligibility for bankruptcy, so it’s important to understand how it works. Understanding the Bankruptcy Means Test can help you gauge its restrictions and how they could influence your circumstances.


Key Takeaway: The Bankruptcy Means Test is an important financial analysis used to determine whether you qualify for Chapter 7 bankruptcy. They use your income, expenses, and deductions (e.g., medical bills or mortgage payments) to determine if there’s sufficient funds left over after paying for necessary living costs that could be allocated toward repaying debts through a Chapter 13 repayment plan. Sometimes, creditors may challenge eligibility based on discrepancies between what they reported on the means test and their own records.

What are the Limits of the Bankruptcy Means Test?

It works by comparing the debtor’s income and expenses to the median income level in their state. If a debtor’s monthly income exceeds the median, they may not qualify for Chapter 7 bankruptcy protection and must instead file under Chapter 13.

In order to be eligible for Chapter 7 bankruptcy, debtors must pass two parts of the means test: first, their current monthly income (CMI) must be below their state’s median; second, any allowable expenses must leave them with enough money left over to pay off at least some of their debts. Household members living in the same abode must factor their revenue, including wages, salary, bonuses, alimony or child support payments and other financial aid into one’s CMI for qualification under Chapter 7 bankruptcy.

They can calculate a debtor’s disposable monthly income (DMI) by subtracting the allowed expenses from the CMI. These expenses include essential costs such as housing payments, utilities bills and food items, taxes owed on earned incomes and other necessary expenditures like health insurance premiums or court-ordered payments that cannot be discharged through filing for bankruptcy protection. If there is still enough money left over after these deductions are considered, then you won’t qualify for Chapter 7 but will instead have to file under Chapter 13, where your repayment plan must get judicial approval before it comes into effect.

The Bankruptcy Means Test is an important tool to determine eligibility for Chapter 7 bankruptcy, and it’s essential to understand the limits of this test before filing. However, if you don’t qualify for Chapter 7 bankruptcy, there are still other options available that may help you find debt relief.

In New York, the median income for a household of 1 is $68,814 as of April 1, 2023.


Key Takeaway: The bankruptcy means test is used to determine eligibility for Chapter 7 protection. They compare the debtor’s current monthly income and allowable expenses against their state’s median to assess whether they have enough disposable income left over after deductions are made, or if they must instead file under Chapter, 13 with a repayment plan that needs judicial approval.

What Happens if I Don’t Qualify for Chapter 7 Bankruptcy?

If Chapter 7 bankruptcy is not an option, there are still other ways to address your financial situation through a Chapter 13 filing. You may still file for Chapter 13 bankruptcy and create a repayment plan with your creditors. This type of filing allows debtors to reorganize their finances and pay back some or all of their debts over a period, usually three to five years.

The Bankruptcy Means Test determines whether you are eligible for Chapter 7 bankruptcy or if you must file under the more restrictive Chapter 13 guidelines. The Bankruptcy Means Test considers your current earnings compared to the average salary in your state, and other elements such as outlays, resources, and liabilities. If your income is higher than the median in your state, then you may not file for Chapter 7 but might still qualify for a repayment plan under Chapter 13.

Consulting an experienced consumer bankruptcy attorney who is well-versed in the applicable state laws and regulations is key when determining eligibility under the means test. Considering such factors as disposable income, assets, debts and the length of repayment plan that would be required before they discharge any remaining unsecured debt obligations, will allow for a comprehensive evaluation to decide if Chapter 7 or 13 filing is more appropriate. Don’t leave yourself in limbo – make sure you’re armed with all of your facts so you can get back on track financially.

If the means test results in an ineligible outcome because of your income level exceeding the median, filing for Chapter 13 bankruptcy may still be a viable option. This type of filing allows you to gain relief from creditor harassment while having some leeway when crafting a payment plan that works best with your finances within the confines set by law. Depending on individual circumstances, this could involve reducing payments on secured loans such as mortgages or car installments and slowly catching up past due balances over time without facing foreclosure or repossession during this period – providing much-needed respite during trying times.


Key Takeaway: The Bankruptcy Means Test determines whether Chapter 7 or 13 bankruptcy is more suitable for the individual, based on their income level compared to median incomes in their state.

FAQs in Relation to Bankruptcy Means Test

What is the means test for bankruptcy?

The means test is a tool used in consumer bankruptcy to determine eligibility for Chapter 7 or 13. It calculates the debtor’s disposable income and compares it to median state incomes, considering certain expenses such as taxes, mortgage payments, child support and medical bills. If the debtor’s disposable income surpasses the median state incomes, considering taxes, mortgage payments, child support and medical bills paid out of it, they may not be eligible for Chapter 7 bankruptcy relief. The means test helps ensure that debtors who can repay some of their debts do so rather than being granted full discharge through Chapter 7.

What is income for the means test in bankruptcy?

The means test in bankruptcy is an income calculation used to determine whether a debtor qualifies for Chapter 7 or 13. The court considers the debtor’s average current income over the preceding half-year, together with other sources of revenue, such as Social Security and jobless benefits. Each state adjusts the exact thresholds annually for inflation.

Is Chapter 7 means test based on gross or net income?

The Chapter 7 means test is based on the debtor’s gross income, which encompasses all remunerations received over a six-month period prior to filing for bankruptcy and deductions permitted by law. The calculation also considers any deductions allowed by law before determining whether the debtor has enough disposable income to repay their creditors in a chapter 13 repayment plan.

How is a 401k considered for the bankruptcy means test?

Depending on the state and individual situation, it may or may not be mandatory to use one’s 401k for Chapter 7 or 13 bankruptcy protection. In addition, it must also report any funds withdrawn from your 401k prior to filing for bankruptcy as income on the means test. It’s important to consult with an experienced consumer bankruptcy attorney before deciding regarding using your retirement savings during a bankruptcy case. Individuals filing for Chapter 7 Bankruptcy in New York must deduct certain employment-mandated deductions from the means test.  In a Chapter 13 any retirement deduction, within reason, is eligible to be deducted from the means test.


It can be a complex process, but understanding the limits of the test and how it works are key to making sure you get the best outcome possible when filing. If the bankruptcy means test does not help you, other alternatives may exist to help you tackle debt. Consult with a lawyer who is an expert in consumer bankruptcy to explore all potential remedies.

Take control of your financial future by consulting with the Law Office of William Waldner to explore bankruptcy options. Our experienced attorneys can help you determine if a Chapter 7 or 13 consumer bankruptcy is right for you and guide you through the means test process.