About 1 in 5 households that file Chapter 7 each year hit a wall called the means test. It is the income-and-expense formula that decides whether a person qualifies to wipe out unsecured debt or has to file Chapter 13 instead. The 2026 version still follows the framework Congress passed in 2005, but the numbers are updated, and most filers learn the rules only after the paperwork is on the table.
This is a step-by-step look at the means test for Chapter 7 bankruptcy, the math, the exceptions, and what happens if the test says no.
The Two-Part Test
The means test has two parts, and a filer can pass either one to qualify for Chapter 7.
Part 1: Median income comparison. Average monthly income for the six months before filing is multiplied by 12 to get an annualized number. If that number is below the median for the household size in the filer's state, the test ends there and Chapter 7 is available.
Part 2: Disposable income calculation. Filers above the median move to Form 122A-2. This form subtracts allowed monthly expenses from monthly income to find disposable income. If disposable income is low enough, Chapter 7 is still on the table.
The state-specific median tables are published by the U.S. Trustee Program and updated every six months in May and November. The 2026 numbers are state-specific, so the median for a family of four in Mississippi looks very different from the same household in Massachusetts. Always check the current Trustee table at the time of filing.
Step 1: Calculate Current Monthly Income
The means test for Chapter 7 bankruptcy starts with the six-month income lookback. Total all gross income from the six full months before the month of filing, then divide by six. Sources include:
- Wages and salary (before deductions)
- Self-employment income
- Rental income
- Pension and retirement
- Spousal contributions for household expenses
- Interest and dividends
Social Security benefits are excluded for means-test purposes, though they still count elsewhere in the bankruptcy paperwork.
Multiply the six-month average by 12 for the annualized number.
Step 2: Compare to State Median
The U.S. Trustee publishes a state-by-state, household-size-by-household-size median income table. Find the row for the state of residence and the column for the household size. If annualized income is at or below that number, the means test is passed at Part 1 and the filer can move forward with Chapter 7.
A quick illustration. Imagine a filer in Texas in 2026 with a household of three. The Trustee median for that household size is, hypothetically, $80,000. The filer's annualized current monthly income is $74,400. Below median. Means test passed.
If the same filer in the same state had annualized income of $94,000, that would be above median, and Form 122A-2 would come next.
Step 3: Form 122A-2 for Above-Median Filers
This is where most means-test failures happen. Form 122A-2 subtracts allowed monthly expenses from monthly income to calculate disposable income. The allowed expenses come from IRS national and local standards, not from actual bills.
Allowable deductions include:
- Housing. IRS local standards by county and family size. There is a separate allowance for rent or mortgage plus utilities.
- Transportation. A standard operating cost per vehicle plus an ownership cost if the filer is making car payments.
- Food, clothing, and personal care. IRS national standard by family size.
- Healthcare. A national standard amount per person, with a higher rate for those over 65.
- Taxes. Actual taxes withheld or paid.
- Mandatory payroll deductions. Union dues, mandatory retirement, and similar.
- Court-ordered payments. Child support and alimony.
- Childcare. Actual cost.
- Term life insurance. Premiums on term policies only.
- Secured debt payments. Average monthly payment on mortgages, car loans, and other secured debt over the next 60 months.
- Priority debts. Tax debt, child support arrears, and similar.
The form also allows a small charity deduction and a special-circumstances category that requires written justification.
The formula is straightforward in concept: total income minus total allowed deductions equals monthly disposable income.
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Step 4: Read the Disposable Income Threshold
Monthly disposable income from Form 122A-2 is multiplied by 60 to get five-year disposable income. The thresholds for 2026 follow the same statutory structure that has applied since 2005, indexed for inflation:
- Below the lower threshold (roughly $9,075 in 2026, subject to indexing): pass. Chapter 7 is available.
- Between the lower and upper thresholds: a percentage-of-unsecured-debt rule applies. If five-year disposable income would pay more than 25% of unsecured debt, the test is failed.
- Above the upper threshold (roughly $15,150 in 2026, subject to indexing): fail. Chapter 7 is presumptively unavailable.
A passing result at Form 122A-2 means Chapter 7 stays on the table. A failing result usually means the case has to be converted, refiled as Chapter 13, or dismissed.
Sample Means-Test Math
To make the abstract concrete, here is a simplified example. A single filer in a high-cost-of-living state earns $7,500 per month gross. Annualized income is $90,000, above the state median for a one-person household of, say, $66,000. The filer moves to Form 122A-2.
Allowed monthly deductions, drawn from IRS standards and actual mandatory expenses:
- Housing and utilities: $2,400
- Transportation (operating + ownership): $850
- Food, clothing, personal care: $725
- Healthcare: $80
- Taxes withheld: $1,500
- Health insurance premiums: $250
- Term life insurance: $40
- Secured debt (auto loan over 60 months): $400
- Child support: $600
Total allowed monthly deductions: $6,845. Monthly disposable income: $655. Annualized over five years: $39,300, which sits above the typical upper threshold. The means test for Chapter 7 bankruptcy would be failed in this example, and Chapter 13 would be the alternative.
A filer in the same income range but in a lower-cost county with no auto-loan secured debt would land in a very different spot, which is why the test is sensitive to inputs.
What to Do If the Means Test Fails
A failed means test is not the end of the road. Three common paths forward:
- Wait six months. A drop in income, a job change, or a household-size change can move the next calculation in the right direction.
- File Chapter 13. Chapter 13 reorganizes debt into a three-to-five-year repayment plan. Most unsecured debt that is not paid by the end of the plan is discharged.
- Restructure outside bankruptcy. Negotiated settlements, hardship plans with creditors, or a managed repayment program through a nonprofit credit counseling agency may resolve the debt without a court filing. For larger debt loads spread across multiple collectors, our National Debt Relief review walks through the typical costs, settlement timeline, and credit impact of a structured for-profit settlement program. For older accounts where the underlying lawsuit window may already have expired, state law can be a separate defense — our guide to the Florida statute of limitations on debt collection shows how the 5-year written-contract and 4-year open-account clocks work in practice.
A bankruptcy attorney usually handles the test itself. The form is technical, the deductions are governed by IRS publications, and small errors get flagged by the Trustee.
After Discharge: Credit Cleanup
A Chapter 7 discharge wipes out qualifying unsecured debts forever. The bankruptcy itself stays on the credit report for up to 10 years from the filing date, and the individual tradelines stay for 7 years. The catch is that some collectors keep reporting balances on accounts that were discharged. That is a common credit-report error that needs to be fixed in writing. Note that this only applies to cases that actually receive a discharge — our breakdown of bankruptcy dismissed vs discharged walks through the very different credit-report and lawsuit-exposure outcomes when a case is dismissed instead.
For the post-discharge cleanup phase, Lexington Law Firm can dispute discharged-but-still-reporting accounts and inaccurate balances with each bureau. The discharge order itself is the key piece of evidence.
This article is general information, not legal advice. A licensed bankruptcy attorney should review any specific filing.
Bottom Line
The means test for Chapter 7 bankruptcy is a two-part formula. Pass the median-income comparison and Chapter 7 is available. Above median, Form 122A-2 subtracts allowed deductions from income to find disposable income, and the result determines whether Chapter 7 stays on the table. The 2026 medians and thresholds are state-specific and updated twice a year by the U.S. Trustee Program. A failed test usually points to Chapter 13.
Frequently Asked Questions
What income counts in the means test?
All gross income from the six months before filing, including wages, self-employment, rental, pension, and spousal contributions to the household. Social Security benefits are excluded from the means-test calculation, although they still appear elsewhere in the bankruptcy paperwork. The six-month total is divided by six and multiplied by 12 for the annualized figure.
What happens if I fail the means test?
A failed means test usually means Chapter 7 is presumptively unavailable. Options include waiting for income or circumstances to change, filing Chapter 13 to restructure the debt under a three-to-five-year plan, or working with a nonprofit credit counselor on a debt-management plan outside bankruptcy.
Are the means test numbers the same in every state?
No. The median income tables published by the U.S. Trustee Program are state-specific and updated every six months. The 2026 numbers vary widely between states and household sizes. Always pull the current Trustee table for the state of residence at the time of filing.
How long does the means test add to the bankruptcy process?
The means test itself is filed with the petition and reviewed by the Trustee at the 341 meeting of creditors, usually four to six weeks after filing. The numbers do not delay the case unless the Trustee challenges them. A challenged means test can extend the case by several months while the calculation is re-examined.
