How to Calculate the Chapter 7 Means Test

Last updated: 2026-09-25

The "means test" is the calculation that decides whether you're allowed to file Chapter 7 bankruptcy — the kind that discharges most unsecured debt in a few months — or whether the court pushes you toward Chapter 13, a 3-to-5-year repayment plan instead. It's not a judgment call by a judge; it's a formula, defined by Congress in the 2005 bankruptcy law (BAPCPA) and filled in every year with fresh government data. That means it's mechanical enough to calculate yourself before you ever talk to an attorney — which is what our means test calculator does.

The two-part structure

The means test runs in two parts, and most filers never reach Part 2 — they pass or fail on Part 1 alone.

Part 1: Are you even a "higher income" filer?

Part 1 compares your current monthly income — averaged over the six full calendar months before you file, not your income today — annualized, against the median income for a household your size in your state. This median isn't a national number; it's published per-state by the U.S. Trustee Program using Census Bureau data, and it's updated roughly twice a year. A single filer in Mississippi and a single filer in Massachusetts are being measured against very different lines.

If your annualized income is at or below the median for your state and household size, you pass the means test outright. No expense deductions, no Part 2 — you're presumed eligible for Chapter 7. Most consumer bankruptcy filers land here.

Part 2: The expense-standard math

If your income is above the median, the test doesn't disqualify you — it just makes you prove you don't have enough left over each month to meaningfully repay creditors. That's where the IRS's own Collection Financial Standards come in: the same allowance tables the IRS uses to decide what a delinquent taxpayer can afford to pay. The means test borrows them wholesale.

Part 2 subtracts, from your current monthly income:

• The IRS National Standard for your household size — a flat allowance for food, housekeeping supplies, clothing, personal care, and miscellaneous expenses. You don't itemize receipts; you get the standard amount regardless of what you actually spend.
• The IRS out-of-pocket health care allowance — a fixed per-person monthly amount, higher for household members 65 and older.
• The IRS Local Standard for housing and utilities in your county — this one varies enormously. A one-person household's housing allowance in Manhattan is roughly double the same household's allowance in most of Texas, because it's built from actual local housing cost data.
• The IRS Local Standard for transportation — ownership costs (capped loan/lease payment) plus operating costs, which vary by Census region.
• Your actual secured debt payments — mortgage, car loan — since those aren't part of what bankruptcy is discharging.

What's left is your disposable monthly income. Multiply it by 60 (five years) and compare that number against two fixed dollar thresholds set by the bankruptcy code:

• Below the lower threshold → you pass. No presumption of abuse.
• Above the upper threshold → you fail. The court presumes you can afford a Chapter 13 plan instead (rebuttable, but it's an uphill argument).
• In between → it depends on your unsecured debt: you pass only if your 5-year disposable income is less than 25% of your total non-priority unsecured debt.

Worked example

A single filer (household size 1) in Harris County, Texas, earning $10,000/month gross, averaged over the trailing 6 months, with $500/month in secured debt payments:

Annualized income here is $120,000 — well above the Texas one-person median, so this filer fails Part 1 and moves to Part 2. At $6,099/month, five-year disposable income is $365,940, far above the upper threshold — a clear Chapter 7 fail. Run your own numbers in the means test calculator — it does this exact arithmetic.

Mistakes that change the result

• Using take-home pay instead of gross income. The means test uses gross income before taxes and deductions — a common and costly mix-up.
• Using this month's income instead of the trailing 6-month average. If you were recently laid off or just started a higher-paying job, "current monthly income" for means-test purposes still looks backward over six full months, not forward.
• Taking the national housing standard instead of the local one. The local standard for your specific county is often dramatically different from the flat national figure — always use county-level data.
• Forgetting secured debt payments are a separate deduction from the housing standard — you get both, not one or the other, in most circuits.
• Assuming failing Part 1 means you can't file Chapter 7. It only means you have to run Part 2 — plenty of higher earners with real secured debt and dependents still pass on the expense side.

If you fail

Failing the means test doesn't end your bankruptcy options — it typically means Chapter 13 instead of Chapter 7: a repayment plan, sized to your disposable income, that runs 3 to 5 years and discharges whatever's left afterward. Our debt settlement vs. bankruptcy comparator lines up the real cost and timeline of that path against settlement and consolidation, so you can see the actual numbers side by side instead of just the pass/fail flag.

This guide explains the mechanics of a federal formula; it is not legal advice, and the standards it describes change over time. See our calculator's disclaimer for the current data sources and their limitations.