What is the bankruptcy means test?

The means test compares your income to your state's median income to determine Chapter 7 eligibility. If your income is below the median, you qualify automatically. If above, a detailed expense analysis determines whether you have enough disposable income to fund a Chapter 13 plan instead.

How do I calculate my income for the means test?

The means test uses your average monthly income from the six full calendar months before filing, not your current income. It includes wages, self-employment income, rental income, pensions, and most other regular income sources. Social Security income is excluded.

What if I fail the means test?

Failing the means test does not prevent you from filing bankruptcy. You can file Chapter 13 instead, wait until your income drops, or demonstrate special circumstances that justify additional deductions. An attorney can help identify legitimate expense deductions you may have missed.

Does the means test apply to Chapter 13?

The means test determines your disposable income and plan length in Chapter 13. If your income is below the median, your plan can be as short as 36 months. If above, you must propose a 60-month plan and pay your full disposable income to unsecured creditors.

What should I know before filing bankruptcy?

Bankruptcy is a legal process that can eliminate or restructure debts, but it has lasting effects on your credit and financial life. Before filing, understand which debts can be discharged, what property you can keep through exemptions, and which chapter fits your situation.

Chapter 13 Repayment Plan

Understanding plan mechanics under 11 U.S.C. Sections 1322 and 1325

Good Faith - 1325(a)(3)

The plan must be proposed in good faith. Courts consider the totality of circumstances: Is the debtor making a genuine effort to repay? Is the plan an honest attempt to deal with creditors? Manipulating income, hiding assets, or proposing an unrealistic plan can result in denial.

Best Interest Test - 1325(a)(4)

Unsecured creditors must receive at least as much as they would receive in a Chapter 7 liquidation. Calculate the value of non-exempt assets - that is the minimum unsecured creditors must receive through the plan.

Disposable Income - 1325(b)

If the trustee or an unsecured creditor objects, the plan must commit all projected disposable income for the applicable commitment period. Below-median debtors: 3 years. Above-median debtors: 5 years.

Disposable income = current monthly income minus reasonably necessary expenses. The means test form (Form 122C) calculates this.

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Related Resources

Section 1328 Discharge - Chapter 13 discharge rules and the superdischarge

Lien Stripping - How to remove underwater junior liens in Chapter 13

Hardship Discharge - Section 1328(b) discharge when you cannot complete your plan

Foundational Caselaw

The cases below define the doctrine on this site:

Till v. SCS Credit Corp., 541 U.S. 465 (2004) - cramdown interest rate in Chapter 13 is the prime rate plus a risk adjustment (1-3%); the formula approach controls over coerced-loan or contract-rate alternatives.
Hamilton v. Lanning, 560 U.S. 505 (2010) - "projected disposable income" under Section 1325(b)(1)(B) determined by the forward-looking approach, not just the historical six-month CMI snapshot.
Local Loan Co. v. Hunt, 292 U.S. 234 (1934) - foundational fresh-start case; the bankruptcy discharge gives the honest but unfortunate debtor a new opportunity in life unhampered by preexisting debt.

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This site provides general information, not legal advice. Consult a qualified attorney for your specific situation.