Texas Chapter 7 Means Test Calculator

Understand your eligibility for Chapter 7 bankruptcy in Texas by using this comprehensive Means Test calculator. This tool helps you assess your income against state median income levels.

Chapter 7 Means Test Eligibility Calculator

The Chapter 7 Means Test determines if your income is low enough to qualify for Chapter 7 bankruptcy. This calculator simplifies the complex calculations required by law. Please ensure you use accurate figures for the six months prior to filing.

Your Means Test Results

Formula Overview: The Chapter 7 Means Test primarily compares your average monthly household income over the last six months to the median income for a household of your size in Texas. If your income is above the median, further calculations involving allowed deductions for secured debts, priority unsecured debts, and specific living expenses are used to determine your disposable income. If disposable income is below a statutory threshold, you may still qualify.

Key Calculation Details

Metric	Value	Notes

Key Assumptions & Inputs:

What is the Texas Chapter 7 Means Test?

The Texas Chapter 7 Means Test is a critical component of the U.S. Bankruptcy Code, designed to prevent individuals with higher incomes from abusing the Chapter 7 bankruptcy process. Chapter 7 bankruptcy, often called liquidation, allows individuals to discharge most unsecured debts (like credit card debt and medical bills) in exchange for turning over non-exempt assets to a trustee. However, the Means Test acts as a gatekeeper, ensuring that only those who genuinely struggle financially can access this form of debt relief. It's a standardized mathematical formula enacted by Congress to measure a debtor's ability to repay their debts.

Who Should Use the Texas Chapter 7 Means Test Calculator?

Anyone considering filing for Chapter 7 bankruptcy in Texas should use this calculator. Specifically, it is most relevant for individuals whose household income, when averaged over the six months preceding their bankruptcy filing, exceeds the median household income for a family of their size in Texas. If your income is below the state median, you generally pass the first part of the Means Test and may be eligible for Chapter 7 without further complex calculations. However, even if your income is above the median, you might still qualify if your specific circumstances, like significant secured debt payments or high allowable living expenses, result in a low calculated disposable income. This Texas Chapter 7 Means Test calculator provides an initial screening.

Common Misconceptions about the Means Test

• "It's just about my current paycheck." The test considers average income over a six-month period, not just your latest pay stub.
• "If I make over the median, I can't file Chapter 7." This is incorrect. The "second part" of the Means Test allows for deductions for certain expenses, which can lower your calculated disposable income and still allow Chapter 7 eligibility.
• "The calculator result is a guarantee." This calculator provides an estimate. An experienced bankruptcy attorney will perform a thorough analysis based on all specific details and local rules.
• "All my debts are wiped out." Chapter 7 does not discharge all debts. Certain debts like most student loans, child support, and recent taxes are typically not dischargeable.

Texas Chapter 7 Means Test Formula and Mathematical Explanation

The Texas Chapter 7 Means Test is a multi-step process. The primary goal is to determine if your household's average monthly income over the six months prior to filing bankruptcy exceeds the median income for a family of your size in Texas. If it does, a secondary calculation is performed to assess your "disposable income."

Step 1: Income Comparison to Median

First, your average monthly household income for the six months preceding the filing date is calculated. This income includes wages, salaries, tips, commissions, business income, pensions, social security, unemployment benefits, and other sources. This average is then compared to the median monthly income for a household of your size in Texas. Official tables, updated periodically by the U.S. Trustee Program, provide these median income figures.

Step 2: Disposable Income Calculation (if income exceeds median)

If your average monthly income surpasses the state median for your household size, you must then calculate your disposable income. This involves subtracting specific, allowed expenses from your average monthly income. The calculation is complex and generally follows this structure:

Disposable Income = (Average Monthly Income) - (Allowable Living Expenses + Allowable Debt Payments)

The IRS guidelines define categories of allowable expenses. These include:

• Stipulated Monthly Expenses: These are amounts set by law for things like food, housing, utilities, transportation, and healthcare, often adjusted based on family size and local cost of living.
• Secured Debt Payments: Average monthly payments on mortgages, car loans, and other debts secured by property.
• Priority Unsecured Debt Payments: Average monthly payments on debts like child support, alimony, and recent taxes.
• Other Necessary Expenses: Specific costs like health insurance premiums, necessary work-related expenses, and certain educational expenses.

If your calculated disposable income (after these deductions) falls below a certain threshold (currently $205.00 per month for a single individual, but this figure can change), you may still pass the Means Test and be eligible for Chapter 7. If your disposable income is above the threshold, you will likely be presumed ineligible for Chapter 7 and may need to consider Chapter 13 bankruptcy.

Variables Table

Mean Test Variables

Variable	Meaning	Unit	Typical Range
Household Size	Number of people in your household, including dependents.	Persons	1 – 20+
Average Monthly Income (Last 6 Months)	Total household income from all sources averaged over the 6 months prior to filing.	USD ($)	0 – Varies Widely
Median Monthly Income (Texas)	State median income for a household of the specified size. Varies by family size and is updated periodically.	USD ($)	Varies based on household size
Average Monthly Payments for Secured Debts	Average payments for mortgages, car loans, etc., over the last 6 months.	USD ($)	0 – 3000+
Average Monthly Payments for Priority Unsecured Debts	Average payments for child support, alimony, recent taxes, etc., over the last 6 months.	USD ($)	0 – 2000+
Allowable Monthly Disposable Income Deduction	Calculated based on specific IRS-defined expense categories.	USD ($)	0 – 1500+
Disposable Income	The amount of income remaining after all allowed expenses and debt payments are deducted. This is compared to a statutory threshold.	USD ($)	0 – Varies Widely

Practical Examples (Real-World Use Cases)

Let's illustrate the Texas Chapter 7 Means Test with two examples using our calculator.

Example 1: Income Below Median

Scenario: Sarah is single (Household Size: 1) and her average monthly income over the last six months was $3,200. The median monthly income for a single person in Texas is $4,100. Sarah has a car payment of $300 per month and no other significant secured or priority unsecured debts.

Calculator Inputs:

• Household Size: 1
• Average Monthly Income: $3,200
• Median Monthly Income for Texas (Household Size 1): $4,100
• Average Monthly Payments for Secured Debts: $300
• Average Monthly Payments for Priority Unsecured Debts: $0
• Allowable Monthly Disposable Income Deduction: $0 (Not needed for this step)

Calculator Output:

The calculator would indicate that Sarah's average monthly income ($3,200) is below the median income for Texas ($4,100). Therefore, she likely passes the first part of the Means Test and is presumptively eligible for Chapter 7 bankruptcy without further calculation.

Interpretation: Sarah's income is below the threshold, so she generally meets the income requirement for Chapter 7 in Texas.

Example 2: Income Above Median, Complex Deductions

Scenario: The Johnson family consists of four people (Household Size: 4). Their average monthly household income over the past six months was $7,500. The median monthly income for a household of four in Texas is $6,800. They have a mortgage payment averaging $1,800/month, a car payment averaging $450/month, and past-due child support payments averaging $250/month. After carefully calculating their allowed living expenses and other necessary costs according to IRS guidelines, their total allowable monthly deductions (including these debt payments) come to $2,500.

Calculator Inputs:

• Household Size: 4
• Average Monthly Income: $7,500
• Median Monthly Income for Texas (Household Size 4): $6,800
• Average Monthly Payments for Secured Debts: $2,250 ($1800 mortgage + $450 car)
• Average Monthly Payments for Priority Unsecured Debts: $250 (child support)
• Allowable Monthly Disposable Income Deduction: $2,500 (This figure would be derived from detailed expense calculations, this is a simplified input for the calculator.)

Calculator Steps (Internal Logic):

1. Income ($7,500) > Median Income ($6,800) – Proceed to Step 2.
2. Calculate Disposable Income: $7,500 (Avg Income) – $2,500 (Allowable Deductions) = $5,000 (This $2,500 would be broken down into stipulated expenses, secured debt payments, priority unsecured payments, etc. For this example, we input the *total* allowable deductions.)
3. Disposable Income ($5,000) is substantially higher than the typical threshold for ineligibility.

Calculator Output:

The calculator will show that income is above the median. It will then calculate the disposable income. Based on these figures, the Johnsons' disposable income of $5,000 per month is very high, indicating they likely would NOT pass the Texas Chapter 7 Means Test and would be presumed ineligible for Chapter 7.

Interpretation: Despite having significant debts, their overall income is too high relative to their allowed expenses, making Chapter 7 unlikely. They should consult an attorney about Chapter 13 bankruptcy options.

How to Use This Texas Chapter 7 Means Test Calculator

Our Texas Chapter 7 Means Test calculator is designed for ease of use. Follow these steps to get an estimate of your eligibility:

1. Gather Information: Collect details of your household income for the past six months. This includes pay stubs, bank statements, and records of any other income sources (benefits, self-employment income, etc.). Also, gather information on your average monthly payments for secured debts (mortgages, car loans) and priority unsecured debts (child support, alimony, recent taxes) over the same six-month period.
2. Find Your Median Income: Look up the current median monthly income for Texas based on your exact household size. This information is typically available from the U.S. Trustee Program website or reliable legal resources. Enter this figure accurately.
3. Input Household Size: Enter the total number of people in your household, including yourself, your spouse (even if not filing), and any dependents you financially support.
4. Enter Average Monthly Income: Calculate the total income your household received in the last six months and divide by six to get your average monthly income. Enter this amount.
5. Enter Debt Payments: Input the average monthly amounts you paid towards secured debts and priority unsecured debts over the last six months.
6. Enter Allowable Expense Deductions: This is the most complex part. Input the total amount of monthly expenses that are legally allowed as deductions under the Means Test. This includes standard living expenses (housing, utilities, food, transportation, clothing, etc.) as defined by the IRS, plus specific costs like healthcare premiums, taxes, and tuition if applicable. Our calculator allows you to input this total figure directly. Consulting an attorney is highly recommended for this specific calculation.
7. Calculate: Click the "Calculate Eligibility" button.

How to Read Results

The calculator will display:

• Primary Result: A clear statement indicating whether you likely pass or fail the Means Test, or if the result is borderline.
• Intermediate Values: Key figures like your calculated disposable income, comparison to median income, and total deductions.
• Formula Overview: A brief explanation of the logic used.
• Table & Chart: Visual representations of your income versus the median and detailed breakdowns.

Decision-Making Guidance

If You Pass: This suggests you are likely eligible for Chapter 7. However, other factors can affect eligibility (e.g., specific types of debt, prior bankruptcy filings). You should still consult with a bankruptcy attorney.

If You Fail: This indicates you are likely presumed ineligible for Chapter 7 based on income. Your attorney will explore if specific deductions apply to lower your disposable income below the threshold, or they will discuss alternative options like Chapter 13 bankruptcy, which is a repayment plan.

If Borderline: Close calls require careful review by an attorney. Small discrepancies in expense calculations can change the outcome. Precision is key.

Key Factors That Affect Texas Chapter 7 Means Test Results

Several crucial factors can significantly influence your eligibility for Chapter 7 bankruptcy in Texas as determined by the Means Test:

1. Household Income Fluctuation: The test averages income over six months. A temporary spike in income (like a bonus or overtime) can push your average above the median, even if your typical income is lower. Conversely, a temporary decrease might help you pass. Understanding how bonuses, commissions, and variable pay are counted is vital.
2. Changes in Household Size: An increase in household size (e.g., a new child, a relative moving in) can raise the state median income threshold for your family, potentially making you eligible even if your income remained constant.
3. Secured Debt Load: Significant monthly payments for mortgages or car loans can be deducted, reducing your disposable income. If you have substantial equity in a home or car, you might face issues with asset exemptions, but the *payment* itself factors into the Means Test calculation.
4. Priority Debts (Child Support, Alimony, Recent Taxes): Payments for these legally mandated obligations are deductible. If you have substantial arrears or ongoing obligations, this can significantly lower your calculated disposable income.
5. Allowable Living Expenses: This is a complex area. The IRS provides guidelines for what constitutes reasonable and necessary expenses for things like housing, utilities, food, transportation, and healthcare. Claiming higher, justifiable expenses (within the allowed limits) can reduce disposable income. This often involves detailed documentation and adherence to IRS standards.
6. Retirement Income & Social Security: While generally considered income, certain types of retirement funds and Social Security benefits may be treated differently or have specific exemption rules, which can indirectly impact the overall financial picture assessed. Consulting an attorney is crucial for understanding these nuances.
7. Assets and Exemptions: While not directly part of the income calculation, the value of your non-exempt assets can influence whether Chapter 7 is a practical choice, even if you pass the Means Test. If you have significant non-exempt assets, a trustee might liquidate them.
8. Timing of Filing: The six-month look-back period is critical. If you anticipate a significant change in income (up or down), strategically timing your filing can impact your Means Test outcome.

Frequently Asked Questions (FAQ)

• How often are the Texas median income figures updated?
  The median income figures are typically updated annually by the U.S. Trustee Program, based on U.S. Census Bureau data. It's important to use the most current figures available at the time of your filing.
• What if my income varies greatly month to month?
  The Means Test requires you to average your income over the six months preceding your filing. If your income fluctuates significantly, you'll need to calculate the total income for that period and divide by six. Bonuses, commissions, and overtime pay are all included.
• Does my spouse's income count if they are not filing for bankruptcy?
  Yes. If you are married, your spouse's income generally counts towards the household income for the Means Test, even if they are not filing jointly, as it contributes to the household's ability to pay debts.
• What are "priority unsecured debts"?
  These are debts that the bankruptcy code prioritizes, meaning they are generally not dischargeable in Chapter 7 and must be paid. Common examples include recent income taxes, child support, and alimony.
• Can I deduct all my regular living expenses?
  No. The Means Test allows deductions for specific categories of expenses based on IRS guidelines and local standards. You cannot deduct every dollar you spend; only those expenses deemed necessary and within allowable limits can be subtracted.
• What happens if I fail the Means Test?
  If you are presumed ineligible for Chapter 7, you typically have two main options: file Chapter 13 bankruptcy (a debt repayment plan) or attempt to demonstrate that your specific circumstances warrant an exception (which is difficult). Consulting an attorney is essential.
• Is this calculator a substitute for legal advice?
  No. This calculator provides an estimate based on the information you input. Bankruptcy law is complex, and individual circumstances vary greatly. Always consult with a qualified Texas bankruptcy attorney for personalized advice.
• What is "disposable income" in the context of bankruptcy?
  Disposable income is the amount of your current monthly income left over after paying your reasonable and necessary living expenses and certain debt obligations. For the Means Test, it's a specific calculation used to determine eligibility for Chapter 7.