Do You Qualify for Chapter 7 Bankruptcy? Run the Means Test Now.

The bankruptcy means test was created by the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA) to prevent high-income filers from using Chapter 7 to discharge debts they could actually afford to repay. Before 2005, anyone could file Chapter 7 regardless of income. The test requires above-median income filers to demonstrate their disposable income (after IRS-defined allowable expenses) is below a threshold. The intent was to redirect people who can afford repayment into Chapter 13 plans instead.

Chapter 7 can discharge most unsecured debts: credit card balances, medical bills, personal loans, utility arrears, most civil judgments, and certain older tax debts. It cannot discharge: student loans (with rare exceptions), recent income taxes, child support, alimony, debts from fraud or intentional wrongdoing, and criminal fines. Secured debts like mortgages and car loans are not discharged — if you want to keep the asset, you must continue paying or reaffirm the debt.

Failing the means test means you don't qualify for Chapter 7 bankruptcy. Your options are: (1) File Chapter 13, which allows you to repay debts over 3–5 years under a court-supervised plan — this still stops collections, freezes interest, and can reduce what you pay on some debts; (2) Wait and refile — if your income drops below the state median, you may qualify for Chapter 7 later; (3) Explore alternatives: debt consolidation, debt settlement negotiation, or credit counseling programs. Failing the means test is not a financial death sentence — it simply redirects you to different debt relief tools.

This calculator provides an educational simulation based on current IRS standards and Census Bureau median income data. It gives a reasonable indication of whether you're likely to qualify, fail, or fall in a gray zone. However, the actual means test has dozens of deduction categories, state-specific local standards for housing and transportation, and nuances around income calculation (what counts as income, which 6 months to average) that require attorney review. Use this as a starting point to understand your situation before a consultation — not as a substitute for professional legal advice.

A Chapter 7 bankruptcy filing remains on your credit report for 10 years from the filing date. Chapter 13 stays for 7 years. The impact on your credit score is severe initially (typically dropping 150–200 points) but diminishes over time as you rebuild credit. Many filers see credit improvement within 2–3 years post-discharge if they establish new positive payment history. The trade-off: the 10-year mark on your report vs. potentially years of struggling to pay unmanageable debt that also damages credit. For many people, bankruptcy offers a faster path to credit recovery than prolonged debt distress.