This calculator helps estimate your eligibility for Chapter 7 bankruptcy by performing a simplified version of the Means Test calculation.
Your Chapter 7 Eligibility Estimate
Understanding the Chapter 7 Bankruptcy Means Test
The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 introduced the "Means Test," a critical component for determining eligibility for Chapter 7 bankruptcy. Chapter 7, often referred to as liquidation bankruptcy, allows individuals to discharge certain debts by liquidating non-exempt assets. However, to prevent abuse, Congress established a means test to identify filers who can afford to repay their debts through Chapter 13 bankruptcy.
How the Means Test Works (Simplified)
The Means Test primarily compares your income to the median income for a household of your size in your state. If your income is below the median, you generally pass the first hurdle and may be eligible for Chapter 7. If your income is above the median, you must then undergo a more detailed calculation, often referred to as the "Second Part of the Means Test," which analyzes your disposable income after deducting certain allowed expenses.
The Income Calculation
The first step is to calculate your average monthly household income over the six months prior to filing bankruptcy. This is your gross income from all sources, including wages, salaries, tips, commissions, bonuses, self-employment income, unemployment benefits, and any other regular income. For this calculator, we are using your stated Average Monthly Household Income (Gross).
Deductible Expenses (The Second Part of the Means Test)
If your average monthly income is above the median for your state and household size, the court will examine your allowed expenses to determine your disposable income. This involves deducting specific categories of expenses, which are often limited by IRS standards or local guidelines. Common deductible expenses include:
Housing Costs: Rent or mortgage payments.
Taxes: Property taxes, income taxes.
Insurance: Mandatory insurance payments like health, auto, and homeowner's/renter's insurance.
Secured Debts: Payments on loans secured by property, such as car loans or mortgages.
Dependent Care: Expenses for childcare or eldercare necessary for you or your spouse to work.
Medical Expenses: Health care costs not covered by insurance.
Education Expenses: Payments for education for yourself or your dependents.
Other Necessary Living Expenses: This includes utilities, food, clothing, transportation, etc. These are often capped by IRS standards.
The Core Calculation in this Calculator:
This calculator uses a simplified approach that combines aspects of both parts of the Means Test:
Calculate Total Average Monthly Expenses: We sum up all the monthly expenses you input (Rent/Mortgage, Taxes, Insurance, Secured Debts, Dependant Care, Health Care Not Covered, Education, Other Essential).
Calculate Disposable Income: Your Disposable Income is calculated as:
Disposable Income = Average Monthly Household Income - Total Average Monthly Expenses
Compare to State Median Income Guideline:
If your Average Monthly Household Income is LESS THAN the State Median Income Guideline, you are generally considered to have passed the Means Test and are likely eligible for Chapter 7.
If your Average Monthly Household Income is GREATER THAN the State Median Income Guideline, we then look at your calculated Disposable Income.
If your calculated Disposable Income is LESS THAN a certain threshold (for simplicity, this calculator assumes a threshold indicating potential eligibility if below median, and potential ineligibility if disposable income is high), you may still be eligible. However, if your disposable income is significantly positive and above the median income, you may be presumed to be abusing the bankruptcy system, and thus not eligible for Chapter 7.
Disclaimer: This calculator provides an ESTIMATE and is NOT a substitute for legal advice from a qualified bankruptcy attorney. Bankruptcy laws are complex, vary by jurisdiction, and depend on individual circumstances. Filing for bankruptcy has significant legal and financial consequences. Consult with an attorney to discuss your specific situation and understand your options.
function calculateMeansTest() {
var householdIncome = parseFloat(document.getElementById("householdIncome").value);
var monthlyRentOrMortgage = parseFloat(document.getElementById("monthlyRentOrMortgage").value);
var monthlyTaxes = parseFloat(document.getElementById("monthlyTaxes").value);
var monthlyInsurance = parseFloat(document.getElementById("monthlyInsurance").value);
var monthlySecuredDebts = parseFloat(document.getElementById("monthlySecuredDebts").value);
var monthlyDependantCare = parseFloat(document.getElementById("monthlyDependantCare").value);
var monthlyHealthCareNotCovered = parseFloat(document.getElementById("monthlyHealthCareNotCovered").value);
var monthlyEducation = parseFloat(document.getElementById("monthlyEducation").value);
var monthlyOtherEssential = parseFloat(document.getElementById("monthlyOtherEssential").value);
var stateMedianIncomeGuideline = parseFloat(document.getElementById("stateMedianIncomeGuideline").value);
var resultValueElement = document.getElementById("result-value");
var eligibilityStatusElement = document.getElementById("eligibility-status");
// Clear previous results
resultValueElement.innerHTML = "";
eligibilityStatusElement.innerHTML = "";
eligibilityStatusElement.className = ""; // Reset classes
// Input validation
if (isNaN(householdIncome) || householdIncome < 0 ||
isNaN(monthlyRentOrMortgage) || monthlyRentOrMortgage < 0 ||
isNaN(monthlyTaxes) || monthlyTaxes < 0 ||
isNaN(monthlyInsurance) || monthlyInsurance < 0 ||
isNaN(monthlySecuredDebts) || monthlySecuredDebts < 0 ||
isNaN(monthlyDependantCare) || monthlyDependantCare < 0 ||
isNaN(monthlyHealthCareNotCovered) || monthlyHealthCareNotCovered < 0 ||
isNaN(monthlyEducation) || monthlyEducation < 0 ||
isNaN(monthlyOtherEssential) || monthlyOtherEssential < 0 ||
isNaN(stateMedianIncomeGuideline) || stateMedianIncomeGuideline <= 0) {
resultValueElement.innerHTML = "Please enter valid positive numbers for all fields.";
return;
}
var totalMonthlyExpenses = monthlyRentOrMortgage + monthlyTaxes + monthlyInsurance +
monthlySecuredDebts + monthlyDependantCare + monthlyHealthCareNotCovered +
monthlyEducation + monthlyOtherEssential;
var disposableIncome = householdIncome – totalMonthlyExpenses;
var message = "";
var statusClass = "";
// Simplified eligibility logic based on common interpretations
if (householdIncome < stateMedianIncomeGuideline) {
message = "Likely Eligible for Chapter 7 (Income Below State Median)";
statusClass = "eligibility-pass";
resultValueElement.innerHTML = "Income: $" + householdIncome.toFixed(2) + "" +
"State Median: $" + stateMedianIncomeGuideline.toFixed(2) + "" +
"Disposable Income: $" + disposableIncome.toFixed(2);
} else {
// Income is above the median, examine disposable income
// A positive disposable income above median is generally problematic for Chapter 7
// The exact threshold for "too high" disposable income varies and is complex.
// This is a simplified check.
if (disposableIncome < 0) {
message = "Likely Eligible for Chapter 7 (Income Above Median, but Expenses Exceed Income)";
statusClass = "eligibility-pass";
resultValueElement.innerHTML = "Income: $" + householdIncome.toFixed(2) + "" +
"State Median: $" + stateMedianIncomeGuideline.toFixed(2) + "" +
"Total Expenses: $" + totalMonthlyExpenses.toFixed(2) + "" +
"Resulting Negative Disposable Income: $" + disposableIncome.toFixed(2);
} else if (disposableIncome > 0 && disposableIncome < 150) { // Arbitrary small positive threshold for consideration
message = "Potentially Eligible for Chapter 7 (Income Above Median, Low Disposable Income)";
statusClass = "eligibility-consider";
resultValueElement.innerHTML = "Income: $" + householdIncome.toFixed(2) + "" +
"State Median: $" + stateMedianIncomeGuideline.toFixed(2) + "" +
"Total Expenses: $" + totalMonthlyExpenses.toFixed(2) + "" +
"Disposable Income: $" + disposableIncome.toFixed(2);
}
else {
message = "Likely NOT Eligible for Chapter 7 (Income Above Median with Significant Disposable Income)";
statusClass = "eligibility-fail";
resultValueElement.innerHTML = "Income: $" + householdIncome.toFixed(2) + "" +
"State Median: $" + stateMedianIncomeGuideline.toFixed(2) + "" +
"Total Expenses: $" + totalMonthlyExpenses.toFixed(2) + "" +
"Disposable Income: $" + disposableIncome.toFixed(2);
}
}
eligibilityStatusElement.innerHTML = message;
eligibilityStatusElement.className = "eligibility-status " + statusClass;
}