The Bankruptcy Means Test Explained: How to Qualify for Chapter 7 (2026)

Last updated: April 2026

The bankruptcy means test determines whether you qualify for Chapter 7 by comparing your household income to your state's median. If your income falls below the median, you pass automatically. If it exceeds the median, a second calculation deducts allowable expenses to measure your actual ability to repay debts. Understanding this process is essential before filing.

The means test was introduced by the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) of 2005 to prevent higher-income filers from discharging debts they could reasonably repay. Despite its complexity, the test follows a logical structure that this guide breaks down step by step.

Who Must Take the Means Test

The means test applies to individual Chapter 7 filers whose debts are primarily consumer debts (as opposed to business debts). You are exempt from the means test if:

• Your debts are primarily business-related
• You are a disabled veteran whose debts were incurred primarily during active duty or while performing a homeland defense activity
• You are an active-duty member of the National Guard or military reserves who served at least 90 days after September 11, 2001

Everyone else must complete Official Bankruptcy Form 122A to determine eligibility.

Part 1: The Income Comparison

The first part of the means test is straightforward. You calculate your "current monthly income" (CMI) and compare it against the median income for your household size in your state.

Calculating Current Monthly Income

CMI includes the average of all gross income received during the 6 full calendar months before filing. If you file in April 2026, you would average income from October 2025 through March 2026. Income sources include:

• Wages, salary, tips, bonuses, overtime, and commissions
• Net business income (for self-employed individuals)
• Rental and real estate income
• Interest, dividends, and royalties
• Pension and retirement income
• Regular contributions from a spouse or others to household expenses
• Unemployment compensation

Social Security benefits are excluded from CMI. This is a critical distinction for retirees and disabled individuals whose primary income comes from Social Security.

2026 State Median Income Thresholds

Median income figures are updated periodically by the U.S. Trustee Program using Census Bureau data. As of early 2026, representative thresholds for a single-person household include:

| State | 1-Person Median | 2-Person Median | |-------|----------------|----------------| | Alabama | $50,232 | $62,478 | | California | $68,937 | $89,514 | | Florida | $55,419 | $70,032 | | New York | $65,847 | $83,256 | | Texas | $57,621 | $73,095 |

These figures vary each year. The current official thresholds are published by the U.S. Trustee Program at justice.gov/ust. Always verify the current numbers before filing.

If your annualized CMI (monthly CMI multiplied by 12) is at or below the applicable median, you pass the means test and may proceed with Chapter 7. No further calculation is needed.

Part 2: The Disposable Income Calculation

If your income exceeds the state median, you move to Part 2 — a detailed calculation of your disposable income. This section uses IRS-approved expense standards rather than your actual spending, though some expenses use actual amounts.

Allowed Expense Categories

The means test deducts expenses in several categories:

IRS National Standards (fixed amounts)

• Food, clothing, housekeeping supplies, personal care, and miscellaneous
• For a single person: approximately $785/month in 2026
• These amounts increase with household size

IRS Local Standards (location-based)

• Housing and utilities: Based on county-level data (e.g., approximately $2,100/month in Los Angeles County vs. $1,200/month in rural Alabama)
• Transportation: Operating costs ($250-$350/month) plus ownership costs ($588/month for one vehicle)

Actual Expense Deductions

• Mandatory payroll deductions (taxes, Social Security, Medicare)
• Health insurance, disability insurance, and HSA contributions
• Court-ordered payments (child support, alimony)
• Childcare and education expenses for dependent children
• Actual secured debt payments (mortgage, car loan) minus the standard allowance
• Priority debts (recent taxes, domestic support) divided over 60 months

Other Allowable Deductions

• Involuntary charitable contributions up to 15% of gross income
• Telecommunications: approximately $75/month
• Additional food and clothing expense (up to 5% above the standard if reasonable)

The Calculation

After deducting all allowed expenses from your CMI, the remaining figure is your monthly disposable income (MDI). The test then applies the following thresholds:

1. MDI below approximately $156/month: No presumption of abuse — you qualify for Chapter 7
2. MDI above approximately $260/month: Presumption of abuse — Chapter 7 is presumed inappropriate
3. MDI between $156 and $260/month: You qualify if your total disposable income over 60 months would be less than 25% of your non-priority unsecured debt

If a presumption of abuse arises, you can still attempt to rebut it by demonstrating "special circumstances" — such as a serious medical condition, a call to active military duty, or another documented situation that justifies additional expenses.

Step-by-Step Walkthrough

Let us work through a concrete example.

Sarah's situation:

• Single, living in Ohio
• Annual gross income: $62,000 ($5,167/month)
• Ohio single-person median: approximately $56,400
• Her income exceeds the median, so she proceeds to Part 2

Part 2 deductions:

• IRS National Standards (food, clothing, etc.): $785
• IRS Local Standards — housing (Franklin County): $1,450
• IRS Local Standards — transportation (one car, owned): $838
• Health insurance: $320
• Taxes and payroll deductions: $1,050
• Car payment (actual secured debt): $420 minus $588 ownership standard = $0 additional
• Total deductions: $4,443

Disposable income: $5,167 - $4,443 = $724/month

Sarah's MDI is $724, well above $260, so there is a presumption of abuse. Chapter 7 is likely unavailable unless she can demonstrate special circumstances. She would likely need to consider Chapter 13 bankruptcy or explore other debt relief options.

Common Mistakes to Avoid

Timing Your Filing

Because CMI is based on the 6 months before filing, the timing of your filing can significantly affect the result. If you recently lost a job or took a pay cut, waiting until the higher-income months fall outside the 6-month window can change your eligibility.

Including Spouse Income

If you are married, your spouse's income is included in the CMI calculation — even if you file alone and even if your spouse has separate debts. However, you can deduct your spouse's separate financial obligations through the "marital deduction" on the means test form. This is a frequently misunderstood aspect of the test.

Forgetting Deductions

Many filers underestimate their allowable deductions. If you have ongoing medical expenses, childcare costs, or mandatory retirement contributions, these can reduce your disposable income significantly. Work with your attorney to identify every legitimate deduction.

Forms You Will Need

The means test is completed on Official Bankruptcy Forms:

• Form 122A-1: Chapter 7 Statement of Your Current Monthly Income
• Form 122A-1 Supp: Statement of Exemption from Presumption of Abuse (if applicable)
• Form 122A-2: Chapter 7 Means Test Calculation (if income exceeds median)

These forms are available for free at uscourts.gov.

What Happens If You Do Not Pass

Failing the means test does not mean you are out of options. You may:

1. File Chapter 13 instead — no means test required, though you must have regular income and debts below specific limits ($2,750,000 as of 2026 under the Bankruptcy Threshold Adjustment and Technical Corrections Act)
2. Wait and refile — if your income is temporarily elevated, waiting for lower-income months to enter the 6-month window may change the result
3. Explore non-bankruptcy alternatives — debt consolidation, negotiation, or settlement may resolve your debts without court involvement

Our debt relief quiz can help you evaluate which approach fits your current financial situation.

Getting Help

The means test involves nuanced calculations and judgment calls about which deductions apply. While online calculators provide rough estimates, consulting a bankruptcy attorney ensures accuracy. Many attorneys offer free initial consultations to evaluate your means test eligibility.

The CFPB (consumerfinance.gov) provides free, unbiased information about bankruptcy and other debt relief options. The U.S. Trustee Program publishes current median income data and expense standards used in the calculation.

Key Takeaways

• The means test has two parts: income comparison and disposable income calculation
• If your household income is below your state's median, you automatically qualify for Chapter 7
• Social Security income is excluded from the calculation
• Allowed expense deductions use IRS standards, not necessarily your actual spending
• Filing timing matters — the 6-month income window can work in your favor
• Failing the means test still leaves Chapter 13, debt consolidation, and other options available

Take the first step by assessing your full range of options. Our debt relief options overview explains each path and when it makes sense.