A bankruptcy means test is a formula used in Chapter 7 bankruptcy to see if your income is low enough to qualify, comparing your income over the last six months to your state's median income for the household size. I the debtor is above the median, further calculations are needed to determine if you have enough disposable income to repay debts, potentially pushing you toward a Chapter 13 plan. It helps prevent abuse by those who can afford to pay debts, with exemptions for things like non consumer debt or disabled veterans.

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How it works

Average your gross income from all sources wages, interest, etc. over the past six months, notes YouTube video.

Compare to State Median

Compare your CMI annualized to the median income for your state and household size, found on the Department of Justice website.

If Below Median

If Above Median

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Presumption of Abuse

If your disposable income is significant e.g., over 25% of nonpriority debt or a set dollar amount , a presumption of abuse arises, potent

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Conditions blocking Chapter 7 unless you prove special circumstances.

Key Exemptions & Considerations

Non Consumer Debt

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Disabled Veterans

Where to find info

Official Forms

Debt incurred primarily during active duty as a disabled veteran might exempt you, notes www.bankruptcypower.com.

Special Circumstances

Medical issues or military service could allow you to rebut the presumption of abuse.

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if you have questions

Median Income Data

The Department of Justice DOJ website offers links to the latest median income data from the Census Bureau.

How the Means Test Works

The process evaluates your financial situation through two primary calculations

Median Income Comparison

Calculation Your average monthly income for the 6 months prior to filing is compared to the median income for a household of your size in your state.

Outcome If your income is lower than the state median, you automatically pass and qualify for Chapter 7. If it is higher, you must proceed to the next step.

Disposable Income Calculation

The Formula You subtract allowed expenses based on IRS National and Local Standards from your monthly income.

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Allowed Expenses These include standard costs for food, clothing, housing, and utilities, plus actual costs for things like child support, taxes, and life insurance.

Threshold If your remaining monthly disposable income is low typically under $160.42 per month for 2025–2028 threshold periods , you may still pass. If it exceeds certain limits roughly $267.50+ per month , a presumption of abuse arises, meaning you likely do not qualify for Chapter 7.

Key Forms and Exemptions

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Official Forms Filers must complete Form 122A 1 Statement of Income and potentially Form 122A 2 Means Test Calculation .

Common Exemptions You may skip the means test entirely if

Your debts are primarily non consumer such as more than 50%

are business or tax debts

You are a disabled veteran who incurred debt while on active duty

You are a military reservist or National Guard member called to active duty