This memo is for informational purposes only and not for the purpose of providing legal
advice. You should contact an attorney of your choosing to obtain advice with respect to any
particular issue or problem. Use of this memo does not create an attorney-client relationship
between you and the author.
There are many matters to think about before filing individual bankruptcy. Most
individuals file either a Chapter 7 (which is usually cheaper and quicker) or a Chapter 13 (which
requires a 5 year payment plan). However, to qualify for a Chapter 7, you must ‘pass’ 2 tests –
The disposable income test and the means test.
The disposable income test is, as it sounds, whether or not you have any disposable income
in a month. That is, if you make $3,000 a month and spend $3,000 a month, you have no disposable
income. In that case you ‘pass’ the disposable income test and would qualify to file for Chapter 7
(under this test). If you make $3,000 a month and spend $2,500 a month, you have $500 extra a
month, and you may not pass the disposable income test.
On October 17, 2005, Congress added the means test. The means test dictates that if you
make over so much money you cannot file for Chapter 7 because you are spending above your
Under the means test if your current monthly income is less than the median income in
your county and state, you can file for bankruptcy under Chapter 7. But if your current monthly
income is above the median income in your state, and you can afford to pay $100 per month toward
paying off your debt, you cannot file under Chapter 7 and must proceed under Chapter 13.
Whether you can afford to pay $100 per month (or $6,000 over a five-year period) is based on a
formula that includes your monthly income, your expenses, and the total amount of your debt.
The means test averages your last 6 months of income. So if you just lost your job you
may not qualify to file Chapter 7, but you might qualify a month or so down the road.
There are abundant exceptions, but generally, the following lists the means test
amount as of September 27, 2017.
Situation Means Test Number
Single $4,105 income per month
Single and 1 dependent $5,142 income per month
Single and 2 dependents $5,476 income per month
Married $5,142 income per month
Married and 1 dependent $5,476 income per month
Married and 2 dependents $6,404 income per month