# Bankruptcy Means Test Calculator

> Chapter 7 bankruptcy eligibility calculator using the federal means test. Compare your income to state median to determine Chapter 7 eligibility.

**Category:** Finance
**Keywords:** bankruptcy, means test, chapter 7, chapter 13, debt relief, income test, state median income, bankruptcy eligibility, financial hardship
**URL:** https://complete.tools/bankruptcy-means-test-calculator

## How the Means Test Works

The means test is a two-part process:

**Part 1 — Median Income Comparison:**
Your "current monthly income" is calculated as your average gross monthly income over the six calendar months before your filing date. This is then annualized (multiplied by 12) and compared to the state median income for your household size. If your annualized income is at or below the median, you pass and can proceed with Chapter 7.

**Part 2 — Disposable Income Test (if above median):**
If you exceed the state median, you must subtract allowable expenses from your current monthly income to determine your "monthly disposable income." Allowable expenses include:

- IRS National Standards for food, clothing, and household supplies
- IRS Local Standards for housing, utilities, and transportation
- Actual expenses for health insurance, childcare, education, and certain secured debts
- Priority debts such as taxes and domestic support obligations

If your monthly disposable income falls below a certain threshold after these deductions, you may still qualify for Chapter 7. If it remains too high, the presumption of abuse arises and you may be required to file Chapter 13 instead.

## What Happens if You Fail the Means Test?

Failing the means test does not necessarily mean you cannot get bankruptcy relief — it means Chapter 7 may not be available to you. There are important alternatives:

**Chapter 13 Bankruptcy:**
Chapter 13 allows you to reorganize and repay debts over a 3- to 5-year repayment plan. You keep your assets while making monthly payments to a trustee who distributes funds to creditors. At the end of the plan, remaining eligible unsecured debts are discharged. Chapter 13 can also help you catch up on mortgage arrears and prevent home foreclosure.

**Special Circumstances:**
If you fail the means test but have experienced extraordinary circumstances — such as serious medical expenses or a job loss after the 6-month income calculation period — you may be able to demonstrate "special circumstances" that reduce your applicable monthly income.

**Rebutting the Presumption of Abuse:**
Even if the means test creates a presumption of abuse, you can rebut it by showing that the presumption does not reflect your true financial situation.

## IRS Standard Allowances Explained

The IRS publishes standard expense allowances used in the bankruptcy means test. These are not arbitrary — they are based on actual consumer spending data and are updated periodically.

**National Standards:**
These cover food, clothing, housekeeping supplies, personal care, and miscellaneous expenses. The allowed amounts vary by household size and are the same regardless of where you live.

**Local Standards:**
Housing and utility allowances vary by county and metropolitan area. Transportation allowances include both ownership costs (car payments) and operating costs (gas, insurance, repairs), and vary by Census region.

**Out-of-Pocket Healthcare:**
A separate healthcare allowance applies based on age. Filers under 65 receive a lower allowance than those 65 and older, reflecting typical out-of-pocket healthcare costs by age group.

If your actual expenses in a category exceed the IRS standard, you generally cannot claim the excess — unless you have documented special circumstances. In some categories (like housing), you can use the lesser of the IRS standard or your actual expense.

## How to Use This Calculator

1. Select your state from the dropdown menu
2. Choose your household size (include yourself and all dependents)
3. Enter your average monthly gross income for the past 6 months (before taxes or other deductions)
4. Enter your monthly expenses in each category (use your best estimate if unsure)
5. Click "Run Means Test" to get your eligibility assessment
6. Review whether your income passes the state median comparison
7. Read the AI-generated assessment and key facts about your situation

The calculator uses current data from the U.S. Trustee Program and IRS standard tables to provide an accurate initial assessment. Note that the actual bankruptcy petition uses Official Form 122A-1, which requires precise documentation of income and expenses.

## FAQs

**Q:** What income counts in the means test?


**A:** The means test uses your "current monthly income" — the average of all gross income received in the 6 calendar months before your filing date. This includes wages, salary, tips, self-employment income, rental income, regular contributions from others, and most other income sources. It excludes Social Security benefits and certain other payments.


**Q:** Does Social Security income count in the means test?


**A:** No. Social Security benefits, including retirement, disability (SSDI), and SSI, are excluded from the means test calculation under federal law. This is a significant exception — many retirees and disabled individuals whose only income is Social Security automatically pass the means test regardless of the amount.


**Q:** What if my income varies month to month?


**A:** Use your average monthly income over the 6 calendar months immediately before your filing date. If you were unemployed for some months, those months count as $0 income. Self-employed individuals should average their business income over the same 6-month period, subtracting ordinary and necessary business expenses.


**Q:** Can I still file Chapter 7 if I fail the means test?


**A:** Possibly. Failing the median income comparison triggers the second part of the test, where you subtract IRS-allowed expenses. Many people above the median still qualify after taking their allowable expense deductions. If you still fail after the expense deductions, you can file Chapter 13 instead, or demonstrate special circumstances.


**Q:** How often do the state median income figures change?


**A:** The U.S. Trustee Program updates state median income figures periodically, usually every 6 months, based on data from the Census Bureau. IRS national and local standards are also updated annually. This is why this calculator uses AI to retrieve current figures rather than hardcoding values that would become outdated.


**Q:** Do I need an attorney to file bankruptcy?


**A:** You are not legally required to have an attorney, but bankruptcy law is complex and filing errors can result in your case being dismissed or denied. Most bankruptcy attorneys offer free initial consultations. Chapter 7 attorney fees typically range from $1,000 to $3,500 depending on your location and case complexity.


**Q:** What debts are discharged in Chapter 7?


**A:** Chapter 7 can discharge most unsecured debts, including credit card debt, medical bills, personal loans, utility arrears, and certain older tax debts. It cannot discharge student loans (in most cases), recent income taxes, child support, alimony, criminal fines, and debts from fraud or willful misconduct.

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*Generated from [complete.tools/bankruptcy-means-test-calculator](https://complete.tools/bankruptcy-means-test-calculator)*