Click to take the Means Test

Don't Qualify for a Chapter 7 because of income. Take the means test. The Next Step in the Means Test (If Necessary) If it is determined in the first step of the Chapter 7 means test that your income is greater than the median income in your state, you will need to move to the next step to determine your Chapter 7 eligibility.

The second part of the Chapter 7 means test calculates your disposable income (the amount of money that you have for yourself at the end of the month after paying your necessary expenses) and compares that with your unsecured debts. In short, you pass the means test and are eligible for Chapter 7 bankruptcy if your disposable income over the next five years is projected to be less than $6,000 ($100 a month).

Now if your disposable income is calculated to be greater than $10,000 over the next five years, it is presumed that you do not need to file Chapter 7 bankruptcy. In this case, you must demonstrate certain special circumstances in order to file Chapter 7 bankruptcy.

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What Happens if Your Disposable Income is in a Gray Area?
If it is found that your calculated disposable income over the next five years is in the grey area between $6,000 and $10,000, another calculation will be required.

At this point, your disposable income over the next five years will be compared to a percentage of your unsecured debt to determine if you could realistically make significant payments to your creditors.

Here’s what will happen if your calculated disposable income over the next five years is:
* less than 25 percent of your unsecured debts – you pass the second part of the means test and will be eligible to file Chapter 7 bankruptcy.
* greater than 25 percent of your unsecured debts – it will be presumed that you don’t need to file Chapter 7 bankruptcy (just as if your calculated disposable income was greater than $10,000).