Do You Qualify for Chapter 7 Bankruptcy? Means Test.

What the Bankruptcy Means Test Actually Measures

The bankruptcy means test was introduced in 2005 to prevent high-income earners from using Chapter 7 — the form of bankruptcy that fully discharges most unsecured debts — when they could actually afford to repay at least some of what they owe. Before 2005, anyone could file Chapter 7 regardless of income. The reform created a two-part income and expense test that determines whether you qualify for Chapter 7 or whether you must use Chapter 13 instead.

Part 1 is straightforward: your Current Monthly Income (CMI) — the 6-month average of gross income from all sources — is compared to your state's median income for your household size. If you're below the median, you automatically pass and can proceed directly to Chapter 7. If you're above it, you must complete Part 2.

Part 2 calculates your 'disposable income': your CMI minus a set of IRS-defined 'allowable expenses.' Critically, these aren't necessarily your actual expenses. For categories like food, clothing, and personal care, the test uses IRS National Standard amounts regardless of what you actually spend. For housing and transportation, it uses IRS Local Standards for your county or state. Only for certain categories — your actual mortgage or rent payment, car payment, health insurance premiums, and taxes — does the test use your real numbers. If your 60-month disposable income (monthly disposable × 60) is under $9,075, you pass. If it's over $15,150, you fail. The zone between those thresholds involves an additional test comparing disposable income to 25% of your unsecured debt.

Simulate the means test for your specific situation

Enter your state, household size, monthly income, and expenses. The calculator runs both parts of the means test and shows your qualification status, the 60-month disposable income calculation, and what to do next.

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How to Evaluate Whether Chapter 7 Is Right for You

1
Calculate your Current Monthly Income (CMI)
CMI is the 6-month average of all gross income received before the bankruptcy filing — not just your most recent paycheck. Include: wages, self-employment income, rental income, regular contributions from others to household expenses, unemployment compensation, pension and retirement distributions, net income from businesses. Exclude: Social Security benefits (deliberately excluded from the means test), payments to victims of war crimes, and certain others. If you had a recent job loss, the 6-month average may include your higher pre-loss income, which could affect Part 1 qualification — this timing consideration can be strategically important.
2
Compare to your state median income
The US Trustee Program publishes state median income tables quarterly, updated from Census Bureau data. The median varies significantly by state and household size. For a family of 4, it ranges from approximately $65,000/year in Mississippi to over $115,000/year in Maryland. If your CMI falls below your state's median for your household size, you automatically pass the means test and proceed to Chapter 7. The median is a hard cutoff — $1 above it triggers the full Part 2 calculation.
3
Calculate allowable monthly expenses (Part 2 only)
If your income is above the median, the test subtracts a set of IRS-defined allowable expenses. For National Standards (food, housekeeping, apparel, personal care, misc): the IRS publishes specific dollar amounts by household size — these are fixed regardless of your actual spending. For Local Standards (housing/utilities and transportation): the IRS publishes county-level amounts for housing and state-level amounts for vehicle ownership and operating costs. For some actual expenses: mortgage/rent, car payments, health insurance, childcare, taxes, and priority debt payments use your real monthly amounts. The result is your monthly disposable income.
4
Apply the 60-month disposable income test
Multiply your monthly disposable income by 60. If the result is under $9,075, you pass — even above-median income filers with sufficient expenses can qualify for Chapter 7. If the result is over $15,150, you fail. In the range between $9,075 and $15,150, an additional test applies: if your 60-month disposable is less than 25% of your total nonpriority unsecured debt, you may still qualify. This gray zone is where the nuances of expense calculation — which numbers to use, how to categorize income — can make the difference between qualifying and not.
5
Evaluate what Chapter 7 would actually discharge
If you qualify, understand what debts can and cannot be discharged. Dischargeable: credit card balances, medical bills, personal loans, utility arrears, most civil judgments, and certain older tax debts. Not dischargeable: student loans (with rare hardship exceptions), child support and alimony, recent income taxes (generally less than 3 years old), debts from fraud or willful misconduct, and criminal fines. Secured debts — your mortgage and car loans — are not discharged; if you want to keep the asset, you must continue paying. Understanding what survives bankruptcy is essential for evaluating whether the 10-year credit report mark is worth the debt relief.
6
Consider Chapter 13 if Chapter 7 is unavailable
If you fail the means test, Chapter 13 bankruptcy allows you to repay debts over 3–5 years under a court-supervised plan. Chapter 13 has advantages Chapter 7 lacks: you can keep all assets (including home equity above the exemption), you can cure mortgage arrears and stop foreclosure, and you can strip off junior liens in some cases. The downside is ongoing monthly payments to a trustee for the entire plan period — typically 60 months. Many people who fail the Chapter 7 means test still benefit significantly from Chapter 13, particularly if they're facing foreclosure or have significant non-exempt assets.

Chapter 7 Bankruptcy Questions Answered

How long does Chapter 7 bankruptcy take from filing to discharge?

A typical Chapter 7 case takes approximately 3–6 months from filing to debt discharge. The process: file petition and schedules (day 1) → automatic stay goes into effect (day 1) → 341 meeting of creditors, typically 3–6 weeks after filing → 60-day creditor objection period → discharge order, typically 90–120 days after the 341 meeting. Most cases involve no court appearances beyond the 341 meeting, which is typically 10–15 minutes. The entire process is faster than most people expect — though preparing the petition and gathering documents beforehand takes time.

What assets can I keep in Chapter 7 bankruptcy?

Chapter 7 exemptions determine what you keep. Federal exemptions include: homestead equity up to $27,900 (some states allow more), one motor vehicle up to $4,450, retirement accounts (401k, IRA) are fully exempt in most states, household goods and furnishings up to $700 per item, tools of the trade up to $2,800, life insurance cash value up to $14,875, and a wildcard exemption of $1,475 plus unused homestead exemption. State exemptions vary dramatically — Florida and Texas have unlimited homestead exemptions; other states cap them at $5,000–$75,000. A bankruptcy attorney can advise which exemption scheme (federal or state) maximizes what you keep.

Will bankruptcy stop wage garnishment and collection calls?

Yes, immediately. The automatic stay — one of the most powerful features of bankruptcy — takes effect the moment you file your petition, not when the case is finalized. The automatic stay immediately stops: wage garnishment, bank account levies, collection calls and letters, lawsuits and court proceedings, foreclosure (temporarily), utility shutoffs, and repossession attempts. Creditors who violate the automatic stay after receiving notice of your bankruptcy filing can be held in contempt of court. The stay remains in effect throughout the bankruptcy process for most debts.

Can I file bankruptcy without a lawyer?

Yes — filing pro se (without an attorney) is legally permitted. However, the bankruptcy petition is extremely detailed, involving dozens of schedules listing every asset, debt, income source, expense, and financial transaction over the past years. Errors can result in case dismissal, loss of exemptions, or worse, accusations of fraud for incomplete or inaccurate disclosures. Studies consistently show that pro se filers have significantly lower success rates than represented filers. Given that bankruptcy attorneys typically charge $1,000–$2,500 for a Chapter 7 case — often far less than the debt being discharged — representation is almost always cost-effective. Many attorneys offer free or low-cost initial consultations.

How soon can I rebuild credit after bankruptcy?

Credit recovery is faster than most people expect. The bankruptcy filing appears on your credit report for 10 years (Chapter 7) or 7 years (Chapter 13), but its impact on your score diminishes significantly over time. Many filers begin receiving secured credit card offers within months of discharge. By 2 years post-discharge, with consistent positive payment history on new accounts, many filers reach scores of 650–700. By year 5, scores above 700 are achievable. The path: secured credit card → credit builder loan → unsecured card → eventually auto loan and mortgage. The bankruptcy itself, paradoxically, often enables faster credit recovery than years of struggling to pay unmanageable debt that continues to generate missed payments and collections.

Run your personalized means test simulation

See whether you auto-qualify (below median) or need the full disposable income calculation. Get your exact qualification status, deduction breakdown, and a comparison of Chapter 7 vs. Chapter 13 vs. alternatives.