Bankruptcy Means Test: How It Works and Common Misconceptions

Filing for bankruptcy can feel overwhelming. You may worry about losing everything or feel unsure whether you qualify. One part of the process that confuses is the bankruptcy means test. This test helps determine eligibility to file for Chapter 7 bankruptcy.

Despite how technical it sounds, the means test is not as complicated as many believe. And no, it’s not designed to trap you or force you to repay debts you can’t afford.

Let’s break it down.

What Is the Bankruptcy Means Test?

The means test compares your income to the median income in your area for a household of a specific size. Its purpose is to separate those who can’t repay their debts from those who might be able to, at least in part.

The test only applies if you’re filing for Chapter 7 bankruptcy. Chapter 13 bankruptcy, which involves a repayment plan, doesn’t require the means test in the same way.

If your income is below the median, you generally pass the test and can file for Chapter 7.

If your income exceeds the median, you must complete additional steps to determine whether you still qualify.

How the Test Works

The test starts by calculating your current monthly income. This is the average income from all sources over the past six months. It includes wages, side gigs, rental income, and even support payments like alimony.

Once you have your average monthly income, it’s compared to the state’s median income level for households of your size.

If your income is higher, don’t panic. The second part of the test looks at your necessary monthly expenses—things like rent, groceries, utilities, child care, medical costs, and taxes.

What’s left after deducting these expenses is called your disposable income. If it’s low enough, you may still qualify for Chapter 7.

Common Misconceptions About the Means Test

1. You Must Be Broke to Qualify

Not true. Many people who file for Chapter 7 have regular jobs or own homes. The test doesn’t look for total financial collapse. It just assesses whether you can realistically repay debts.

2. You Can’t File If Your Income Is Too High

Also false. Even if you earn more than the median income, allowable expenses might still reduce your disposable income enough to qualify. The full test accounts for the real costs of living.

3. The Test Decides Everything

The means test is a big part of qualifying for Chapter 7, but it’s not the only factor. Your financial situation—including assets, liabilities, and family needs—also matters.

4. You’ll Be Forced Into Chapter 13

If you don’t pass the means test, Chapter 13 is an alternative—but not a punishment. Some people even prefer it because it lets them keep certain assets while paying down debt in a structured way.

What to Keep in Mind

If you’re considering bankruptcy, don’t let the means test scare you off. It’s simply a way to determine whether you qualify for immediate debt discharge or a longer-term repayment plan.

What matters most is that you get honest information and understand your options.

You don’t need to guess whether you qualify. You can take the test with the help of a legal professional who will walk you through it step by step.

Take the First Step Toward Relief

For more information or to schedule a consultation to discuss your situation, contact R. Flay Cabiness, II, P.C. at (912) 417-5041 (Brunswick, GA), (912) 809-2141 (Hazlehurst, GA), or (912) 324-3176 (Jesup, GA). A quick call could be the first step toward the fresh start you’ve been looking for.