Chapter 7 Income Limits: How the Means Test Really Works

There is no fixed dollar income limit for Chapter 7. The test compares your household’s average income over the six full calendar months before you file against the median family income for your state and household size. Below that median, you pass and nothing further is required. Above it, a second calculation subtracts allowed expenses to see whether meaningful disposable income remains.

The detail that decides real cases is the six-month window, because it means the month you file changes the answer.

Part one: current monthly income

Add every dollar of household income received in the six full calendar months before the filing month, divide by six, multiply by twelve. That is your annualized figure, and it goes on Form B122A-1.

What counts is broader than “salary”:

• Wages, tips, bonuses, commissions, overtime
• Self-employment and business income
• Unemployment compensation
• Rental and investment income
• Pension and retirement income
• Regular contributions from anyone else to household expenses — including a non-filing spouse’s income and regular family support

What does not count: Social Security benefits are excluded from current monthly income, which is a significant carve-out. Certain payments to victims of war crimes and terrorism are also excluded.

Then compare against the median for your state and household size. Those figures are updated periodically and vary widely between states — get them from the current U.S. Trustee table, not from an article. A number published a year ago may no longer be the number your court applies.

Why the six-month window is the whole game

Because it is a rolling look at the past, not a measure of your situation now.

• You were laid off two months ago. Your six-month average still contains four months of full salary, so you may fail a test on income you no longer have. Waiting a month or two changes the average, and each month that passes drops a high month and adds a low one.
• A bonus landed in March. Filing in April includes it. Filing in October may not.
• You just started a much better job. The six-month average may still be low enough to pass — and waiting makes it worse, not better.

This is the single most valuable thing to understand about the means test, and it is why “I make too much for Chapter 7” is frequently wrong as a permanent statement. It is a statement about a specific filing date.

Part two: if you are above the median

Failing part one does not end it. Form B122A-2 subtracts allowed expenses from your income, using a mix of IRS national and local standards — food, clothing, housing, utilities, transportation, by county and household size — plus actual amounts for certain categories: taxes, mandatory payroll deductions, insurance, childcare, court-ordered payments, secured debt payments on property you are keeping, and priority debt like support arrears and recent taxes.

If what remains is below the statutory thresholds, the presumption of abuse does not arise and you can proceed with Chapter 7 despite being above the median. A meaningful number of above-median filers pass here, particularly those with a mortgage, a car payment and dependents.

Four ways people qualify who assumed they could not

1. Timing the filing so the six-month window reflects reduced income.
2. Passing the expense calculation in part two — high secured payments and dependents do most of the work.
3. Debt that is primarily non-consumer. If more than half your debt is business debt rather than consumer debt, the means test does not apply at all. This catches people who guaranteed a failed business.
4. The service member and veteran exemptions. Disabled veterans whose debt was incurred primarily during active duty or homeland defense activity, and reservists and National Guard members called to active duty for a qualifying period, are excluded from the test under §707(b)(2)(D).

What happens if you genuinely fail

The case does not simply get rejected — you are routed toward Chapter 13, where you repay a court-approved amount over three or five years and receive a discharge at completion. Whether that is bad news depends on the rest of your picture: if you have a mortgage in arrears or non-exempt equity, Chapter 13 may have been the better chapter regardless. See what happens if you are routed to Chapter 13.

The mistake to avoid: manufacturing a pass

Do not reduce income, delay income, or shuffle assets in order to pass. Payments to relatives, sudden transfers and unusual timing are exactly what trustees look at, and the consequences range from a denied discharge to a fraud referral. Filing at a moment when your income is genuinely lower is legitimate planning. Making your income look lower is not, and the line between the two is a question for an attorney, not for a spreadsheet.

Frequently asked questions

What is the income limit for Chapter 7? There is no fixed dollar limit. You are compared against the median family income for your state and household size, using your average income over the six full calendar months before filing. Those medians change periodically and differ substantially between states.

Can I file Chapter 7 if I make too much money? Often, yes. Above-median filers go through an expense calculation, and those with mortgages, car payments, dependents or high mandatory deductions frequently pass it. Separately, filers whose debt is mostly non-consumer, and certain veterans and reservists, are exempt from the test entirely.

Does Social Security count in the means test? No. Social Security benefits are excluded from current monthly income. They may still appear elsewhere in your schedules and in a Chapter 13 budget analysis.

Does my spouse’s income count if they are not filing? Yes, to the extent it contributes to household expenses. It is reported, with an adjustment available for amounts a non-filing spouse spends on their own separate obligations.

How do I calculate the means test myself? Official Forms B122A-1 and B122A-2 walk through it, using the current U.S. Trustee median tables and the IRS expense standards for your county. It is arithmetic, but the classification of income and expenses is where errors happen.

If I fail the means test, can I try again later? Yes. The calculation is tied to the six months before filing, so a later filing uses a different window. This is a routine reason to wait.

This article explains the means test in general terms. It is not legal advice. No median income figures are published here on purpose: they are updated periodically and an out-of-date number would be worse than no number. Use the current U.S. Trustee table and confirm your calculation with a bankruptcy attorney in your district.