If you want to file Chapter 7 bankruptcy in New York, you have to pass the means test. It is a formula, not a judgment call, and it exists to stop people who can genuinely afford to repay their creditors from wiping the debt out entirely. Fail it and Chapter 7 closes to you — but Chapter 13 stays open.
The name misleads people. Plenty of clients come in assuming they earn far too much to qualify, then pass comfortably once their rent, taxes, and childcare come off the top. The test measures what is left over, not what comes in.
What the Means Test Actually Measures
The calculation runs on your current monthly income — the average of everything your household received during the six full calendar months before the month you file. That includes wages, bonuses, self-employment income, unemployment, rental income, spousal support, and regular contributions from anyone else living in the home. Social Security benefits are excluded.
Because it is a six-month average, timing carries real weight. A bonus paid five months ago still counts against you; the same bonus paid seven months ago does not. This is one of several reasons the month you file can change the outcome of your case.
Step One: The Median Income Comparison
Your current monthly income is annualized and compared against the median family income for a New York household of your size. Come in under it and you are finished — you pass, and there is no second step.
For cases filed on or after July 15, 2026, the New York figures are:
- 1 earner — $73,272
- 2 people — $92,902
- 3 people — $115,579
- 4 people — $139,040
- Add $11,100 for each additional person beyond four
These numbers are revised twice a year, every April and November, so the only chart that matters is the one in effect on the day your petition is actually filed. The current table is published by the U.S. Trustee Program. If your income sits near the line, how New York’s median income figures apply to your household is worth understanding in detail.
Step Two: Allowable Expenses and Disposable Income
Above the median, you move to the longer form. Here you subtract allowable expenses from your income: IRS National Standards for food, clothing, and personal care; Local Standards for housing and transportation in your county; and your actual payments on secured debts such as a mortgage or car loan. Certain other costs — court-ordered support, health insurance, mandatory payroll deductions — come off as well.
What remains is your disposable income. If it is low enough, you pass at step two and Chapter 7 is available despite an above-median income.
Be thorough and be accurate. The expense side is where cases get scrutinized, and a means test that overstates deductions invites a challenge you do not want.
If You Pass
You can proceed with Chapter 7, which discharges most unsecured debt — credit cards, medical bills, personal loans — typically within a few months of filing.
Passing does not always mean Chapter 7 is the right choice. If you are behind on a mortgage and want to keep the house, Chapter 13 may serve you better even though you qualify for Chapter 7, because it lets you cure the arrears over three to five years.
If You Don’t Pass
Failing the means test is not the end of the road. Four paths remain open:
File Chapter 13 instead. Your payment is based on what you can actually afford each month, and you keep your property while you repay.
Wait. Because the six-month window rolls forward, an income drop can change the result. If you lost overtime or a job three months ago, the picture in another three months may look very different. Waiting only helps if your circumstances have genuinely changed — retaking the test on identical numbers produces an identical answer.
Special circumstances. Section 707(b)(2)(B) of the Bankruptcy Code allows a debtor to rebut a presumption of abuse by documenting circumstances that leave no reasonable alternative — a serious medical situation or a call to active military duty, for example. This is a narrow provision, not a general appeal, and it has to be itemized and sworn to.
Check whether the test applies at all. The means test governs debtors whose obligations are primarily consumer debts. If most of what you owe came from a business, the test may not apply to you in the first place.
Can Anyone Challenge Your Means Test?
Yes. The U.S. Trustee reviews filings and can move to dismiss a Chapter 7 case under Section 707(b) if the numbers do not hold up. Creditors can raise the issue too, and they sometimes compare what you reported against their own records — credit card statements, loan applications, pay information. Discrepancies between the two invite exactly the kind of attention a bankruptcy case does not need.
Common Questions
Is the means test based on gross or net income?
Gross. Current monthly income counts income before taxes and most deductions. Taxes come back out later, on the expense side of step two, rather than being netted out at the start.
How are 401(k) and retirement contributions treated?
They are handled very differently depending on the chapter. In a New York Chapter 7 case, only employment-mandated deductions come out of the means test — voluntary retirement contributions generally do not. In a Chapter 13, a retirement deduction is eligible to be deducted from the means test, within reason. Money already withdrawn from a 401(k) before filing is reported as income.
Does everyone have to take the means test?
Chapter 13 filers complete a similar calculation, which determines whether the repayment plan runs three years or five. So the form follows you into Chapter 13 — it simply answers a different question there.
What if I fail by a small margin?
Small margins are usually where careful work pays off. Household size, which expenses are claimed, and which county’s Local Standards apply can all move the number. It is worth having the calculation checked before you conclude that Chapter 7 is closed to you.
Need Help With the Means Test?
The means test is arithmetic, but the inputs involve judgment, and the difference between passing and failing is often a matter of how the form is prepared rather than how much you earn. If you want a straight answer about where you stand, I offer a free 20-minute consultation and I will run the numbers with you.
Contact William Waldner Professional Corporation to get started.
