Chapter 7 Bankruptcy Means Test Calculator
Use this calculator to get an estimate of whether you might qualify for Chapter 7 bankruptcy based on the Means Test. This test compares your income to your state's median income and, if necessary, evaluates your disposable income after allowed expenses.
Understanding the Chapter 7 Bankruptcy Means Test
The Chapter 7 Means Test is a crucial part of the bankruptcy process, designed to determine if an individual or couple primarily with consumer debts qualifies for Chapter 7 bankruptcy. Chapter 7 allows for the discharge of most unsecured debts, but it's generally reserved for those who truly cannot afford to repay their creditors.
Why the Means Test Exists
Introduced with the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA), the Means Test aims to prevent higher-income debtors from filing Chapter 7 when they could reasonably afford to repay some of their debts through a Chapter 13 repayment plan. If you fail the Means Test, you may be required to file Chapter 13 bankruptcy instead, which involves a 3-5 year repayment plan.
How the Means Test Works: Two Main Steps
The Means Test typically involves two primary steps:
Step 1: The Median Income Test
The first step compares your "current monthly income" (CMI) to the median income for a household of your size in your state of residence. Your CMI is generally the average of your gross income over the six full calendar months immediately preceding your bankruptcy filing. This includes most sources of income like wages, business income, rental income, and unemployment benefits, but typically excludes certain benefits like Social Security, VA disability, and child support payments.
- If your CMI is at or below your state's median income: You generally pass the Means Test and are presumed eligible for Chapter 7 bankruptcy. No further calculation is usually required.
- If your CMI is above your state's median income: You must proceed to Step 2, the Disposable Income Test.
Step 2: The Disposable Income Test
If your income is above the state median, the Means Test becomes more complex. This step involves calculating your "disposable income" by deducting a specific set of allowed expenses from your CMI. These allowed expenses are not simply your actual expenses; they are largely based on standardized figures set by the Internal Revenue Service (IRS) for living expenses, along with other specific deductions permitted by the bankruptcy code.
Examples of Allowed Expenses:
- IRS National Standards: Fixed amounts for food, clothing, personal care, and miscellaneous items, based on household size.
- IRS Local Standards: Figures for housing and utilities (based on location and household size) and transportation (ownership/lease costs and operating costs).
- Other Necessary Expenses: Actual monthly payments for health insurance, life insurance, court-ordered payments (e.g., child support, alimony), child care, education for employment, charitable contributions (up to 15% of gross income), certain taxes, and payments on secured debts (like car loans and mortgages).
- Priority Unsecured Debt Payments: Payments on certain debts that receive priority in bankruptcy, such as recent tax debts or child support arrears.
Once your total allowed expenses are deducted from your CMI, the remaining amount is your monthly disposable income. This figure is then multiplied by 60 (for 5 years) and compared against specific thresholds:
- If your 60-month disposable income is below a certain threshold (e.g., $9,075 as of 2024): You generally pass the Means Test.
- If your 60-month disposable income is above a higher threshold (e.g., $15,175 as of 2024): You generally fail the Means Test and are presumed to have the ability to pay your debts through Chapter 13.
- If your 60-month disposable income falls between these two thresholds: A further calculation is required, comparing your disposable income to 25% of your non-priority unsecured debt. This is a "gray area" where the outcome can be less straightforward.
Important Considerations and Disclaimer
The Chapter 7 Means Test is a highly technical and detailed calculation. This calculator provides a simplified estimate based on the information you provide and general thresholds. It does not account for all nuances, exceptions, or special circumstances that may apply to your specific situation.
It is absolutely critical to consult with a qualified bankruptcy attorney in your state. An attorney can accurately calculate your CMI and allowed expenses, advise you on the most appropriate bankruptcy chapter, and ensure all legal requirements are met. Bankruptcy laws and median income figures change periodically, so professional legal advice is essential.
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function calculateMeansTest() {
var householdSize = parseFloat(document.getElementById('householdSize').value);
var averageMonthlyIncome = parseFloat(document.getElementById('averageMonthlyIncome').value);
var stateMedianIncome = parseFloat(document.getElementById('stateMedianIncome').value);
var totalAllowedExpenses = parseFloat(document.getElementById('totalAllowedExpenses').value);
var resultDiv = document.getElementById('result');
// Clear previous results
resultDiv.innerHTML = ";
// Input validation
if (isNaN(householdSize) || householdSize < 1 ||
isNaN(averageMonthlyIncome) || averageMonthlyIncome < 0 ||
isNaN(stateMedianIncome) || stateMedianIncome < 0 ||
isNaN(totalAllowedExpenses) || totalAllowedExpenses < 0) {
resultDiv.innerHTML = 'Please enter valid positive numbers for Household Size, and non-negative numbers for income and expenses.';
return;
}
var outputHTML = '';
// Step 1: Median Income Test
outputHTML += '
Step 1: Median Income Test
';
outputHTML += 'Your Average Monthly Gross Income (6 months prior):
$' + averageMonthlyIncome.toFixed(2) + '';
outputHTML += 'State Median Income for your Household Size:
$' + stateMedianIncome.toFixed(2) + '';
if (averageMonthlyIncome <= stateMedianIncome) {
outputHTML += '
Result: You likely PASS the Chapter 7 Means Test based on the median income test.';
outputHTML += 'No further calculation is typically required. You are generally presumed eligible for Chapter 7 bankruptcy.';
} else {
outputHTML += '
Result: Your income is ABOVE the state median. Proceed to Step 2 (Disposable Income Test).';
// Step 2: Disposable Income Test
outputHTML += '
Step 2: Disposable Income Test
';
var disposableIncome = averageMonthlyIncome – totalAllowedExpenses;
var disposableIncomeOver60Months = disposableIncome * 60;
// Means Test Thresholds (as of May 1, 2024 – these change periodically)
// Source: https://www.justice.gov/ust/means-testing
var lowerThreshold60Months = 9075; // If disposable income over 60 months is less than this, you pass
var upperThreshold60Months = 15175; // If disposable income over 60 months is more than this, you fail
outputHTML += 'Your Calculated Monthly Disposable Income:
$' + disposableIncome.toFixed(2) + '';
outputHTML += 'Your Disposable Income over 60 months (5 years):
$' + disposableIncomeOver60Months.toFixed(2) + '';
outputHTML += 'Lower Threshold (60 months):
$' + lowerThreshold60Months.toFixed(2) + '';
outputHTML += 'Upper Threshold (60 months):
$' + upperThreshold60Months.toFixed(2) + '';
if (disposableIncomeOver60Months < lowerThreshold60Months) {
outputHTML += '
Result: You likely PASS the Chapter 7 Means Test based on the disposable income test.';
outputHTML += 'Your disposable income is below the threshold, indicating you may not have sufficient income to repay creditors under a Chapter 13 plan.';
} else if (disposableIncomeOver60Months > upperThreshold60Months) {
outputHTML += '
Result: You likely FAIL the Chapter 7 Means Test.';
outputHTML += 'Your disposable income is above the threshold, suggesting you may have the ability to repay a significant portion of your debts through a Chapter 13 repayment plan.';
} else {
// This is the "gray area" where it depends on 25% of non-priority unsecured debt
outputHTML += '
Result: Your disposable income falls into a "gray area".';
outputHTML += 'Your disposable income over 60 months is between $' + lowerThreshold60Months.toFixed(2) + ' and $' + upperThreshold60Months.toFixed(2) + '.';
outputHTML += 'In this scenario, you may still qualify for Chapter 7 if your disposable income over 60 months is less than 25% of your non-priority unsecured debt. This calculation is more complex and requires specific debt figures.';
outputHTML += 'It is CRITICAL to consult with a qualified bankruptcy attorney for an accurate assessment.';
}
}
outputHTML += '
Disclaimer: This calculator provides an estimate based on simplified inputs and current (2024) thresholds. Bankruptcy laws are complex and change frequently. This is not legal advice. Always consult with a qualified bankruptcy attorney for personalized guidance.';
resultDiv.innerHTML = outputHTML;
}