What Is the Bankruptcy Means Test?

One of the first steps in the process of filing for bankruptcy is the bankruptcy means test.

Conducting this test is an essential part of the process to determine who qualifies for bankruptcy and who does not. For those that are unfamiliar, there may be some confusion surrounding the means test.

Although it is a crucial step in a major process, the test itself is actually quite straightforward. Here is a brief explanation of the means test, how it works, and what it means to pass or fail.

What Is the Bankruptcy Means Test?

The bankruptcy means test is not a written test filled with questions that the applicant must get correct.

Rather, it is an assessment of the applicant’s income used to determine whether or not that individual qualifies for bankruptcy.

The test takes into account all personal sources of income to assess the individual’s financial situation.

This test is only for individuals with personal consumer debts. The processes for corporate bankruptcy are different from personal bankruptcy. An individual filing for bankruptcy in America can qualify for one of two options: Chapter 7 or Chapter 13.

Taking the Means Test for Bankruptcy Chapter 7

The first step in the process is to gather as much recent income documentation as possible. The means test only covers the last 6 months of income. However, exceptions can be made for recent or expected changes in income such as new unemployment status.

This phase of the test determines the applicant’s income level. If your income is below the state’s mean income level for their household size, you qualify for Chapter 7 bankruptcy. Bankruptcy means test calculators are available online, but the calculation is fairly straightforward.

It is simply a calculation of personal income compared to the state’s average income for similarly sized households.

Chapter 7 bankruptcy is likely the first process that comes to mind when most people think of the term “bankruptcy.”

Under this Chapter, many of the debtor’s non-essential assets are liquidated to help pay off their creditors. Most people pass at this initial stage. But, for those who fail, the process does not immediately end, and there are additional steps to take.

What is the bankruptcy means test?

Above-Mean Income

“Failing” the first stage of the means test does not close the door on qualifying for bankruptcy.

Both Chapter 7 and Chapter 13 are still options, even if your income is above the state average. Stage two of the Chapter 7 bankruptcy means test involves documenting expenses rather than income.

Under the test, certain essential payments are “allowable expenses.” These include things like rent and food. Any income left over after calculating allowable expenses is deemed “disposable income.”

If your disposable income is insufficient to pay your debts, you may qualify for Chapter 7 after all. If this is the case, you can then begin the process of filing for Chapter 7. So, if you have too much income, you may fail the test.

Failing the Means Test

Failing the means test still does not mean there is no path to declaring bankruptcy. If you fail to qualify for Chapter 7, Chapter 13 is still an option. Chapter 13 differs in that you do not liquidate assets to pay off creditors.

Rather, the debtor is given a strict, adjusted financial plan to pay off their creditors in installations. Any disposable income, as determined by the means test, is used to determine the figures of the adjusted financial plan.

Many debtors choose Chapter 13 over Chapter 7 because it protects from the loss of assets. However, failing does not mean that Chapter 7 is permanently off-limits. The test only covers the most recent six-month period. So, applicants are free to retake the test after six months have passed.

Anyone considering taking the means test or filing for bankruptcy should seek out an attorney before taking any action. An experienced bankruptcy lawyer can help ensure a stable financial future for you and your family.

If you are considering filing for bankruptcy, a crucial first step is to hire a bankruptcy lawyer. With an attorney on your side, your future financial security will be in much safer hands.

Discuss your options with one of our bankruptcy lawyers today! To discuss with an experienced attorney, call us at 801-285-0980.

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At Blue Bee Bankruptcy, our lawyers are highly experienced in the various filing options.

More importantly, we understand that each case we receive is unique and each client has different needs and goals. We will discuss these signs with you and decide the best route to take.

We strive to help our clients rebuild their lives and take steps toward a better financial future through filing. 


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If you’re dealing with the potential of bankruptcy, give us a call. Our team will work to help you by reviewing all of the options our firm has available. We will ensure you’ll get the best possible outcome for your situation.

Get in touch today so we can start working on either halting bankruptcies or preventing them from taking place altogether!

Contact Us Today For Help! You can schedule your free consultation online or call us at (801) 285-098.


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