The Bankruptcy Means Test Explained: Do You Qualify for Chapter 7? (2026 Guide)
Learn how the Chapter 7 bankruptcy means test works. State median incomes, IRS deduction standards, disposable income thresholds, and Chapter 13 alternatives — with updated 2026 figures.
1. How the Means Test Works
The means test (11 U.S.C. § 707(b)(2)) is a two-step process that determines whether filing Chapter 7 bankruptcy would be an “abuse” of the system:
Step 1: Income vs. State Median
Average your gross income from ALL sources over the 6 calendar months before filing (called “Current Monthly Income” or CMI). Annualize it (CMI × 12) and compare to your state's median income for your household size. If below median → you pass automatically.
Step 2: Disposable Income Test (if above median)
Subtract IRS-standard deductions (living expenses, transportation, health care) and actual expenses (housing, taxes, insurance) from your CMI. Multiply disposable income by 60 months. If the result is below $9,075, you pass. Above $15,150, you fail. In between, a 25% unsecured debt test applies.
What Counts as Income (and What Doesn't)
Included:
- Wages, salary, commissions, bonuses
- Self-employment / 1099 income
- Rental income, pensions
- Unemployment, workers' comp
- Alimony / child support received
Excluded:
- Social Security (retirement, SSDI, SSI)
- Payments to victims of war crimes
- Certain DoD payments
2. State Median Income (2026 Figures)
These are the current figures effective April 1, 2026, published by the DOJ US Trustee Program. For households larger than 4, add $11,100 per additional person.
| State | 1 Person | 2 People | 3 People | 4 People |
|---|---|---|---|---|
| California | $79,253 | $102,797 | $116,541 | $139,071 |
| Texas | $66,837 | $86,714 | $99,273 | $117,962 |
| Florida | $69,876 | $86,523 | $97,540 | $114,761 |
| New York | $73,272 | $92,902 | $115,579 | $139,040 |
| Illinois | $73,180 | $93,934 | $113,625 | $137,902 |
| Pennsylvania | $72,230 | $87,534 | $110,151 | $135,862 |
| Ohio | $66,239 | $83,725 | $102,504 | $123,702 |
| Georgia | $68,478 | $84,965 | $101,479 | $123,481 |
| Massachusetts | $88,202 | $112,708 | $139,411 | $178,524 |
| Mississippi | $53,978 | $70,328 | $82,846 | $97,464 |
| DC | $85,391 | $161,397 | $161,397 | $166,598 |
Full state data available in our calculator. Source: DOJ US Trustee Program, Census Bureau data.
Highest and Lowest Medians (1 Person)
Highest: Massachusetts ($88,202), Washington ($88,585), Utah ($87,898), Colorado ($87,940).
Lowest: Mississippi ($53,978), Arkansas ($58,421), Louisiana ($59,447), Oklahoma ($61,180).
Higher median = easier to qualify (your income is more likely to be below it).
3. Allowed Deductions
If your income is above your state's median, you subtract these IRS-standard deductions to calculate disposable income:
IRS National Standards (automatic — no documentation needed)
| Household Size | Monthly Allowance |
|---|---|
| 1 person | $839 |
| 2 people | $1,481 |
| 3 people | $1,753 |
| 4 people | $2,129 |
| Each additional | +$394 |
Covers food, clothing, housekeeping, personal care, miscellaneous. Effective Apr 2025 - Jun 2026.
Other Standard Deductions
- Out-of-pocket health care: $84/month per person (under 65) or $149/month (65+)
- Vehicle ownership: $662/month (1 car) or $1,324 (2 cars) — only if you have a car payment
- Vehicle operating: $232-$401/month depending on region/metro area
- Public transit: $244/month (if no vehicle)
Actual Expense Deductions (must document)
- Housing (rent/mortgage) and utilities — actual amounts
- Income taxes and payroll taxes
- Health insurance and disability insurance premiums
- Court-ordered payments (child support, alimony)
- Child care and education for employment
- Involuntary payroll deductions (union dues, uniforms)
- Secured debt payments (mortgage, auto loan)
- Priority debt payments (tax debt, domestic support)
4. Disposable Income Thresholds
After subtracting all allowed deductions, your monthly disposable income is multiplied by 60 months:
PASS
Below $9,075
(<$151.25/month)
MIDDLE ZONE
$9,075 - $15,150
25% of unsecured debt test
FAIL
Above $15,150
(>$252.50/month)
Middle zone: If your 60-month disposable income is between $9,075 and $15,150, you fail only if that amount is enough to pay at least 25% of your nonpriority unsecured debts. Otherwise, you pass.
These thresholds are effective April 1, 2025 through March 31, 2028. Previous thresholds were $8,775 / $14,625.
5. Chapter 7 vs. Chapter 13
| Chapter 7 | Chapter 13 | |
|---|---|---|
| Process | Liquidation | Repayment plan |
| Timeline | 3-4 months | 3-5 years |
| Means Test | Required | Not required |
| Keep Assets | Exempt assets only | Keep all assets |
| Debt Limits | None | Secured: $1,580,125 Unsecured: $526,700 |
| Credit Report | 10 years | 7 years |
| Plan Length | N/A | 3 yrs (below median) 5 yrs (above median) |
6. Real-World Examples
Example 1: Below Median — Texas, Family of 3
- Monthly income (CMI): $7,500 → Annual: $90,000
- TX median for 3-person household: $99,273
- $90,000 < $99,273 → PASS — Chapter 7 eligible
- No further testing needed
Example 2: Above Median, Still Passes — California, Single
- Monthly income (CMI): $7,000 → Annual: $84,000
- CA median for 1-person: $79,253 → Above median, full test required
- Deductions: Living ($839) + Health OOP ($84) + Housing ($2,200) + Transport ($943) + Health ins ($350) + Taxes ($1,200) = $5,616
- Disposable: $7,000 - $5,616 = $1,384/month
- Wait — that's $83,040 over 60 months, well above $15,150
- FAIL — but California's high housing costs often bring this down
- With $2,800/month rent: deductions = $6,216, disposable = $784, 60-month = $47,040 → still fails
- This earner likely needs Chapter 13 or to explore special circumstances
Example 3: Above Median, Passes on Deductions — Ohio, Family of 4
- Monthly income (CMI): $11,000 → Annual: $132,000
- OH median for 4-person: $123,702 → Above median
- Deductions: Living ($2,129) + Health OOP ($336 for 4 people) + Housing ($1,600) + Utilities ($250) + Transport own ($1,324) + Transport op ($518) + Health ins ($600) + Child care ($800) + Taxes ($2,500) = $10,057
- Disposable: $11,000 - $10,057 = $943/month
- But this seems high... 60-month = $56,580 → would fail
- Add secured debt payments (mortgage + car = $2,800/month as actual deduction): disposable drops to $0
- $0 × 60 = $0 < $9,075 → PASS
The Bottom Line
The means test looks complicated, but the first step is simple: compare your income to your state's median. If you're below it, you qualify for Chapter 7 regardless of your debts. If you're above it, the allowed deductions — especially housing, transportation, and secured debt payments — often bring disposable income below the threshold.
Use our Bankruptcy Means Test Calculator for a quick estimate, then consult a bankruptcy attorney. Most offer free consultations and can run the full means test with your actual numbers.
Disclaimer: This guide provides a simplified overview. The actual means test has additional line items. This is not legal advice — consult a bankruptcy attorney.
Frequently Asked Questions
What is the bankruptcy means test?
The means test is a formula that determines whether you qualify for Chapter 7 bankruptcy. It compares your average monthly income over the past 6 months to your state's median income for your household size. If you're below the median, you pass automatically. If above, a detailed calculation using IRS-standard deductions determines whether you have enough disposable income to repay your debts through Chapter 13.
Can I pass the means test if I make too much money?
Yes. Even if your income exceeds your state's median, you can still pass if your allowable deductions (housing, transportation, taxes, health care, etc.) leave you with less than $151.25/month in disposable income ($9,075 over 60 months). High-cost-of-living areas with expensive housing often produce passing results even for above-median earners.
What debts can be discharged in Chapter 7?
Chapter 7 discharges most unsecured debts including credit cards, medical bills, personal loans, and utility bills. It does NOT discharge student loans (in most cases), child support, alimony, most tax debts, court fines, or debts from fraud/DUI injuries. Secured debts (mortgage, auto loan) are not discharged unless you surrender the collateral.
How long does bankruptcy stay on your credit report?
Chapter 7 bankruptcy stays on your credit report for 10 years from the filing date. Chapter 13 stays for 7 years. However, many people see credit score improvements within 1-2 years after discharge as the debt-to-income ratio improves and on-time payments on remaining debts accumulate.