Median Income Test Notes

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    To qualify for Chapter 7 bankruptcy, you must pass the means test, which compares your household income to the median income in your state for a household your size.
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Median Income Test Notes

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Updated: 2020-09-23
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Median Income Test Explained

The bankruptcy law determines your income by looking at your household income during the six full calendar months before you file for bankruptcy.

Effect of the six-month income rule

If your income declined suddenly within the past six months and has not yet increased, waiting until after the first of the month to file will lower your monthly income figure used for the means test. That is, even if you don't qualify this month, you may qualify after the first of next month, or the month after that, if your income remains below the average monthly income for your state.

Effect of the number of people in your household

You may have noticed already that changing the number of persons in the household dramatically affects the median income figure. You can't include a roommate who is not your dependent in your household size, yet you may have to include the portion of their income that contributes to the overall income of the household. See the help topic on that subject.

If your six-month household income was more than 's median income for a household of your size, don't fret. Fill out Form B122A-2 (Expense Deductions).

You probably still qualify for Chapter 7, but you'll need to answer more questions to find out. Most people qualify once all factors are taken into account.

Info is not advice

This site points to numerous books, articles and services that can help you figure out whether it makes sense for you to file for bankruptcy.

However, this website cannot answer whether you, specifically, should or should not file for bankruptcy.

If you're still not sure whether bankruptcy is right for you, you may want to seek credit counseling from a reputable agency or consult a lawyer.

 

* If your six-month household income was less than the median for your state, consider this:

Complete Form B122A-1 of the calculator to make sure that you've properly computed your income. Although you are not legally required to complete Form B122A-2, the "expenses" part of the means test, it will give you a sense of how a judge or trustee might view your ability to pay.

Some judges look to your ability to pay as part of the "totality of the circumstances" test (Section 707(b)(3)), and will bar you from Chapter 7 bankruptcy, whether your income is above or below the median.

Bottom line: Whatever your income, if the calculator indicates that you have money left over after expenses, study the list of allowed expenses in the means test form and fill in any that apply.

Another thing to worry about: Some judges may rely on different required forms as guides in looking at the "totality of the circumstances" under 707(b)(3): Specifically Form B 106, Schedules I and J. These forms also deal with income and expenses but can yield a different "disposable income" result than the means test form (Form B122A) because different things are allowed and excluded on each form. Most notably, the means test income formula (and this calculator) excludes income from Social Security benefits, while Schedule I does not. Whether your Social Security income can render you ineligible for Chapter 7 is an unsettled area of law. At least one court has ruled that, by enacting the means test as it did, Congress intended that Social Security income be excluded when determining Chapter 7 eligibility; however, it still must be reported on Schedule I.

If you have significant income from Social Security benefits, be aware of this issue.


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