Do I Qualify for Bankruptcy? Full Eligibility Guide

Not Everyone Qualifies for Every Chapter — and the Differences Are Significant

Many people assume bankruptcy is a simple on/off switch: you are either eligible or you are not. In reality, there are two primary personal bankruptcy chapters with distinct eligibility requirements, and qualifying for one does not guarantee qualifying for the other. Chapter 7 requires passing an income-based means test. Chapter 13 requires regular income, a history free of recent prior filings, and total debt below statutory limits. A third option — Chapter 11 — exists for debtors who exceed Chapter 13 limits, but involves far greater complexity and expense.

The stakes of getting this wrong are high. Filing a Chapter 7 petition when you do not qualify leads to a presumption of abuse and potential dismissal, leaving you with a filing on your record, attorney fees spent, and the original debts still outstanding. Filing Chapter 13 without understanding whether you have the income sustainability to complete a 3-to-5-year plan is the primary reason roughly 60% of Chapter 13 cases fail before discharge. Understanding your eligibility before you file — and planning accordingly — is the single most valuable thing you can do before entering the bankruptcy process.

This guide walks through every eligibility gate for both chapters. If you want to run the numbers for your specific income, state, household size, debt levels, and prior filing history, the calculator below checks all the conditions simultaneously and tells you exactly where you stand.

Check your Chapter 7 and Chapter 13 eligibility in one place

Enter your income, state, household size, debts, and prior filing history. The calculator runs every eligibility gate and shows you exactly where you qualify, where you are borderline, and what to fix.

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The Complete Bankruptcy Qualification Checklist

1
Check the Chapter 7 means test: Part 1 — income vs state median
The means test begins with comparing your current monthly income (CMI) to your state's median income for a household of your size. CMI is a backward-looking calculation: the total income you received in the 6 calendar months before filing divided by six. It includes wages, self-employment income, rental income, interest, pension payments, and regular contributions from others — but excludes Social Security benefits and most tax refunds. If your CMI is at or below the state median for your household size, you automatically pass Part 1 and qualify for Chapter 7 without further income analysis. State medians are updated twice a year by the U.S. Trustee Program and vary significantly: a 2-person household in Mississippi has a median near $52,000/year; in Maryland, it is over $106,000/year. Household size matters: adding dependents raises the median threshold, potentially shifting a borderline case into automatic eligibility.
2
If above median, complete the means test Part 2 — disposable income analysis
Exceeding the state median does not disqualify you from Chapter 7 — it triggers Part 2 of the means test (Form 122A-2), which calculates your monthly disposable income after subtracting IRS-standardized allowed expenses. Deductions include: IRS National Standards for food, clothing, household supplies, and personal care; IRS Local Standards for housing and transportation costs; actual secured debt payments (your mortgage, car loan); actual priority debt payments (taxes, support); health insurance, disability insurance, and health savings account contributions; actual childcare expenses; actual telecommunication expenses (internet, phone) up to the IRS standard; 401(k) and pension contributions; and other specific allowances. If the resulting disposable income is below $167/month — or below 25% of your nonpriority unsecured debt divided by 60 — you still pass the means test despite being above median. Many people who are initially above the state median pass Part 2 with proper deduction documentation.
3
Verify the waiting period between prior bankruptcy filings
If you have filed bankruptcy before, specific waiting periods apply before you can receive another discharge. Chapter 7 after Chapter 7: 8 years from prior filing date. Chapter 13 after Chapter 7: 4 years. Chapter 7 after Chapter 13: 6 years (with exceptions if you paid 100% of unsecured creditors or paid 70% in good faith). Chapter 13 after Chapter 13: 2 years. These periods run from filing date to filing date — not from discharge date. You can still file within the waiting period (the automatic stay still applies temporarily), but you will not receive a discharge, which eliminates the primary benefit of filing. If you filed within the last 12 months and your case was dismissed, additional restrictions apply to the automatic stay on refiling.
4
Check Chapter 13 debt limits
Chapter 13 eligibility requires that your total nonpriority unsecured debt (credit cards, medical bills, personal loans) not exceed approximately $465,275 and your total secured debt (mortgages, car loans, home equity loans) not exceed approximately $1,395,875 as of 2024. These limits are adjusted every three years by the Judicial Conference. If you exceed either limit, Chapter 13 is not available to you as an individual. Most consumer debtors are comfortably within these limits, but small business owners who have personal guarantees on business debt may find their combined totals approach the thresholds. Chapter 11 does not have these debt limits and is the appropriate chapter for debtors who exceed them, though it is significantly more complex and expensive.
5
Complete pre-filing credit counseling
Both Chapter 7 and Chapter 13 require completion of an approved credit counseling course within 180 days before filing the bankruptcy petition. The counseling must be from an agency approved by the U.S. Trustee Program — not just any credit counseling provider. Most approved agencies offer the course online or by phone in 1 to 2 hours for a fee of $25 to $50, with hardship waivers available. The counseling generates a certificate that must be filed with the court along with your petition. If you file without the certificate, the case will be dismissed. Completing this step in advance is easy and inexpensive; forgetting it after hiring an attorney and preparing the petition is an unnecessary delay.
6
Check for the 180-day automatic stay bar from voluntary dismissal
If you voluntarily dismissed a bankruptcy case in the 12 months before your proposed new filing, the automatic stay on the new filing is limited to 30 days (if one prior dismissal) or does not apply at all (if two or more prior dismissals in the prior year). This is a critical issue if you are being threatened with foreclosure, repossession, or wage garnishment and were counting on the automatic stay for immediate protection. You can ask the court to extend or impose the full automatic stay, but this requires a motion and a hearing within 30 days of filing. If this situation applies to you, discuss it with an attorney before filing — timing and strategy matter significantly.

Bankruptcy Qualification Questions Answered

What income is included in the Chapter 7 means test?

The means test uses 'current monthly income' (CMI), which is a specific legal term defined in the bankruptcy code. It includes wages and salaries, self-employment income, interest and dividends, rental income, pension and retirement payments, regular contributions from others to household expenses, and net monthly income from business or farm operations. It does NOT include Social Security retirement or disability payments, most tax refunds, one-time payments (lawsuit settlements, inheritances received as a lump sum), or payments received by a military spouse during their partner's active duty deployment. Because Social Security income is excluded from the means test calculation, retirees who live primarily on Social Security often pass the means test easily regardless of the dollar amount they receive.

Can I pass the means test if I am self-employed or have irregular income?

Yes, though the calculation is more complex. The 6-month average applies to whatever you actually received in income during those months — if your business had a slow period, that lowers your CMI. If it had a strong period, that raises it. You calculate net business income (gross receipts minus ordinary business expenses, not IRS schedule C — the means test uses a specific definition) and average it over 6 months. Timing matters: if you have significant upcoming low-income months, filing later can lower your CMI average. If you recently had a bad income year but things are improving, filing sooner captures the lower income period. An attorney can help model the optimal filing timing based on your income trajectory.

What happens if I do not qualify for either chapter?

If your income is too high for Chapter 7 and your debt exceeds Chapter 13 limits, Chapter 11 is the primary alternative for individual debtors. Chapter 11 has no income or debt limits, and the 2019 Small Business Reorganization Act (SBRA) created a streamlined 'Subchapter V' process specifically for individuals and small businesses with total debt below approximately $3 million, which is faster and less expensive than traditional Chapter 11. However, Chapter 11 is still significantly more complex and expensive than Chapter 7 or 13. Some debtors in this position instead use aggressive out-of-court negotiation (settling debts for less than owed) or structured debt management plans as alternatives to formal bankruptcy.

Does my spouse's income count in the means test if we are not filing jointly?

If you are married but filing individually, your spouse's income IS included in the means test calculation under the 'marital adjustment' rules — with some deductions. You include your spouse's income in the CMI calculation but can then subtract the portion of their income that is NOT paid toward joint household expenses. If your spouse has their own car loan, personal credit card, or individual expenses that are not household expenses, those payments reduce the marital income contribution in the calculation. This is called the marital adjustment deduction. The result is that even if your spouse earns significantly more than you, their income contribution to the means test may be substantially lower than their gross income if they have significant personal non-household expenses.

How does the means test work for people who recently lost their job?

The means test looks backward 6 months, so if you recently lost your job but had 6 months of employment income before that, your CMI will still reflect the prior wages. This creates a counterintuitive situation: someone who lost their job last month may still 'fail' the means test based on prior months' earnings, even though they are now unemployed. Filing quickly after a job loss is often better than waiting — each month you wait, the high-income months are still in the 6-month window. After 6 full months of reduced or zero income, the average drops substantially. However, you also need income to fund a Chapter 13 plan — so there is a tension between 'waiting to lower the CMI' and 'needing income for a reorganization.' Chapter 7 timing optimization is a legitimate and common strategy.

Run your complete qualification check now

Enter your state, household size, income, deductions, debts, and prior filing history. The calculator checks every eligibility gate for both chapters simultaneously and tells you exactly where you stand.

Check Bankruptcy Eligibility