The means test is the primary eligibility gateway for Chapter 7 bankruptcy, but it is more flexible than most people realize.
How the Means Test Works
The means test has two parts:
- Part 1 -- Income comparison: Calculate your average monthly income over the 6 months before filing. If this figure is at or below the median income for your state and household size, you pass automatically. No further calculation is needed. For a family of four, the median ranges from roughly $75,000 to $120,000+ depending on the state.
- Part 2 -- Expense deduction: If your income exceeds the median, you subtract IRS-allowed living expenses, secured debt payments (mortgage, car loan), and priority debts (taxes, child support). If your remaining "disposable income" is below the threshold, you still qualify for Chapter 7.
Who Usually Passes?
The majority of people who want to file Chapter 7 pass the means test. High earners can sometimes qualify due to large mortgage payments, medical expenses, payroll taxes, or mandatory retirement contributions that reduce disposable income. The means test looks at your full financial picture, not just your gross income.
State-by-State Variation
Median income figures are updated periodically by the Census Bureau and vary significantly by state. A household of four in Mississippi has a much lower median than one in Connecticut. Your location directly affects your Chapter 7 eligibility.
Even if you fail the means test, you can still file Chapter 13, which has no income ceiling. The means test only determines whether Chapter 7 is available to you.