This calculator provides an ESTIMATE of your potential eligibility for Chapter 7 bankruptcy based on the Means Test. It is not a substitute for professional legal advice.
Understanding Chapter 7 Bankruptcy and the Means Test
Chapter 7 bankruptcy, often referred to as liquidation bankruptcy, allows individuals to discharge most unsecured debts like credit card debt, medical bills, and personal loans. However, to qualify for Chapter 7, debtors must pass the "Means Test." The Means Test is a federal requirement designed to prevent individuals with sufficient income from abusing the bankruptcy system.
How the Means Test Works
The Means Test compares your average monthly income over the six months prior to filing for bankruptcy against the median income for a household of your size in your state. The calculation has two parts:
Part 1: Income Comparison
If your current monthly income is LESS than the median income for a household of your size in your state, you are generally presumed to qualify for Chapter 7. This calculator uses your provided monthly income against the state median you enter.
Part 2: Calculation of Disposable Income
If your current monthly income is MORE than the state median, you must then calculate your disposable income. This involves deducting certain allowed living expenses from your income. If your disposable income is below a certain threshold, you may still qualify for Chapter 7. The formula is generally:
Disposable Income = (Current Monthly Income) – (Allowable Living Expenses)
Calculator Inputs Explained:
Number of People in Household: The total number of individuals in your family unit. This is crucial for comparing against state median income benchmarks.
State Median Income for Household Size (Monthly): You need to find this figure for your state and household size from the U.S. Trustee Program website. This is a critical benchmark.
Your Total Monthly Household Income: All income received by all members of your household before taxes and deductions.
Monthly Housing Payment (Rent or Mortgage): Your actual monthly payment for your primary residence.
Monthly Utilities Expense (Average): Includes electricity, gas, water, sewer, trash, and internet.
Monthly Food Expense (for Household): A reasonable amount for groceries and meals for your household.
Monthly Car Payment(s) (Total): The total of all monthly payments for all vehicles owned by the household.
Monthly Car Insurance: The cost of insuring all vehicles.
Monthly Health Insurance Premiums: The total cost of health insurance premiums for the household.
Monthly Childcare Expenses: Costs associated with childcare necessary for you or your spouse to work.
Other Necessary Monthly Expenses: This can include things like mandatory payroll deductions (not already accounted for), necessary education expenses, and certain other essential costs.
Important Considerations:
Accuracy is Key: The figures you input should be accurate and based on documentation. The court will verify these numbers.
State Variations: Median income figures vary significantly by state and household size. Always use the most current official data for your jurisdiction.
Allowable Expenses: The IRS and bankruptcy courts have specific guidelines on what constitutes an "allowable" expense. Not every expense you pay is automatically deductible.
The "Look-Back" Period: For income, the Means Test looks at the six months before you file.
Legal Advice is Essential: This calculator is a tool for initial assessment only. Bankruptcy law is complex. Consulting with a qualified bankruptcy attorney is crucial to understand your specific situation, options, and the nuances of the Means Test in your district. They can help you accurately calculate expenses and determine the best course of action.
Disclaimer: This calculator is for informational purposes only and does not constitute legal advice. Eligibility for Chapter 7 bankruptcy is determined by federal law and individual circumstances, and requires a formal legal process.
function calculateEligibility() {
var householdSize = parseFloat(document.getElementById("householdSize").value);
var medianIncome = parseFloat(document.getElementById("medianIncome").value);
var monthlyIncome = parseFloat(document.getElementById("monthlyIncome").value);
var rentOrMortgage = parseFloat(document.getElementById("rentOrMortgage").value);
var utilities = parseFloat(document.getElementById("utilities").value);
var food = parseFloat(document.getElementById("food").value);
var carPayment = parseFloat(document.getElementById("carPayment").value);
var carInsurance = parseFloat(document.getElementById("carInsurance").value);
var healthInsurance = parseFloat(document.getElementById("healthInsurance").value);
var childcare = parseFloat(document.getElementById("childcare").value);
var otherNecessaryExpenses = parseFloat(document.getElementById("otherNecessaryExpenses").value);
var resultDiv = document.getElementById("result");
resultDiv.innerHTML = ""; // Clear previous results
resultDiv.className = ""; // Reset classes
// Input validation
if (isNaN(householdSize) || householdSize <= 0 ||
isNaN(medianIncome) || medianIncome <= 0 ||
isNaN(monthlyIncome) || monthlyIncome < 0 ||
isNaN(rentOrMortgage) || rentOrMortgage < 0 ||
isNaN(utilities) || utilities < 0 ||
isNaN(food) || food < 0 ||
isNaN(carPayment) || carPayment < 0 ||
isNaN(carInsurance) || carInsurance < 0 ||
isNaN(healthInsurance) || healthInsurance < 0 ||
isNaN(childcare) || childcare < 0 ||
isNaN(otherNecessaryExpenses) || otherNecessaryExpenses < 0) {
resultDiv.innerHTML = "Please enter valid positive numbers for all fields.";
return;
}
var eligible = false;
var explanation = "";
// — Means Test Logic —
// Part 1: Income comparison against state median
if (monthlyIncome < medianIncome) {
eligible = true;
explanation = "Your current monthly income is below the state median for your household size. You are generally presumed eligible for Chapter 7.";
} else {
// Part 2: Calculate disposable income if income is above median
var totalAllowableExpenses = rentOrMortgage + utilities + food + carPayment + carInsurance + healthInsurance + childcare + otherNecessaryExpenses;
// Note: Real Means Test calculations involve more complex deductions (like NATIONALLY ALLOWED EXPENSE AMOUNTS for certain categories, car ownership limits, etc.)
// This calculator uses the DIRECTLY PROVIDED expenses as a simplified model.
// A more accurate calculation would require more detailed inputs and specific state/IRS guidelines.
var disposableIncome = monthlyIncome – totalAllowableExpenses;
// Simplified threshold: If disposable income is negative or very low, eligibility might be possible.
// A common (but simplified) threshold used in basic explanations is roughly $0 or a small positive amount.
// The actual IRS threshold varies and depends on regional cost of living adjustments.
// For this calculator, let's assume a basic threshold for demonstration.
var simplifiedDisposableIncomeThreshold = 150; // This is a placeholder and not exact legal threshold.
if (disposableIncome <= simplifiedDisposableIncomeThreshold) {
eligible = true;
explanation = "Your current monthly income is above the state median, but after deducting your listed necessary expenses, your calculated disposable income (" + disposableIncome.toFixed(2) + ") is below the simplified threshold. You may still qualify for Chapter 7.";
} else {
eligible = false;
explanation = "Your current monthly income is above the state median, and after deducting your listed necessary expenses, your calculated disposable income (" + disposableIncome.toFixed(2) + ") appears to be too high. You may not qualify for Chapter 7 based on this simplified calculation.";
}
}
// Display Result
if (eligible) {
resultDiv.innerHTML = "Potential Eligibility: Eligible for Chapter 7" + explanation + "";
resultDiv.classList.add("eligible");
} else {
resultDiv.innerHTML = "Potential Eligibility: Likely Ineligible for Chapter 7" + explanation + "";
resultDiv.classList.add("ineligible");
}
}