Glossary

Means Test

Written by JaredLast reviewed 2026-08-25

What is the bankruptcy means test?

The means test is the formula in 11 U.S.C. § 707(b)(2) that a Chapter 7 case runs through to decide whether the filing is presumed to be an abuse of the chapter. It only applies to an "individual debtor whose debts are primarily consumer debts" — the standard § 707(b)(1) sets before any means testing starts. A business owner whose debts are mostly trade debt, or a debtor whose obligations are mostly a mix that isn't primarily consumer in nature, is outside § 707(b) regardless of income.

At its core, the test does one thing: it compares the debtor's income to their state's median family income for a household of the same size, and routes the case down one of two paths depending on the result. At or below the median, the mechanical formula generally never runs — § 707(b)(7) protects income "equal to or less than" the median, so a household sitting exactly at the line is on the protected side. Above it, income minus a set of allowed expenses, projected over 60 months, gets checked against fixed dollar thresholds.

How is "current monthly income" measured?

Not by looking at a pay stub from the day of filing. 11 U.S.C. § 101(10A) defines "current monthly income" as the average monthly income the debtor receives from all sources — "without regard to whether such income is taxable income" — over the 6 calendar months ending on the last day of the month immediately before the case is filed. It also picks up regular contributions a non-debtor makes toward household expenses, and it excludes Social Security benefits, payments to victims of war crimes, crimes against humanity, or terrorism, and — since the HAVEN Act of 2019 — monthly compensation, pension, pay, annuity, or allowance paid under title 10, 37, or 38 in connection with a disability, a combat-related injury or disability, or the death of a member of the uniformed services. That last exclusion is not limited to combat-related awards. Because it's a trailing average rather than a snapshot, a recent layoff or a recent raise takes months to fully show up in the number.

How does income get compared to the state median?

The comparison runs by household size against the applicable state's median family income figures — Census Bureau data republished for bankruptcy use on its own recurring schedule, typically taking effect for cases filed on or after April 1 and again on or after November 1 each year. Under 11 U.S.C. § 707(b)(7)(A), once the current monthly income of the debtor — combined with the debtor's spouse, and multiplied by 12 — is at or below that median, "no judge, United States trustee ..., trustee, or other party in interest may file a motion under paragraph (2)." That spousal combination applies whether or not the case is a joint one; § 707(b)(7)(B) is the narrow exception, excluding a spouse's income in a non-joint case only where the couple are separated or living separate and apart and the debtor files a sworn statement disclosing what the spouse contributes. A related, broader restriction in § 707(b)(6) limits who may bring any motion at all under § 707(b), including a bad-faith argument, to the judge, the U.S. trustee, or a bankruptcy administrator once the debtor's own income — or, in a joint case, the couple's combined income — is at or below the threshold.

What happens when income is above the median?

Then the formula in § 707(b)(2)(A)(i) runs: the court presumes abuse exists if current monthly income, reduced by three categories of allowed deductions and multiplied by 60, is not less than the lesser of (I) 25% of the debtor's nonpriority unsecured claims or $10,275, whichever is greater, or (II) $17,150. The U.S. Courts' own summary of the test states both figures; their April 1, 2025 effective date comes from the Judicial Conference notice that set them, published in the Federal Register on February 4, 2025.

The deductions that reduce income before that multiplication happen in three pieces, all under § 707(b)(2)(A):

A debtor above the median generally can't substitute higher actual spending for the IRS Standards amounts in category (ii) — the statute allows the "applicable monthly expense amounts specified under the National Standards and Local Standards," not what the household actually spends, which is the most common source of confusion about how the number gets calculated. But "applicable" is doing real work there. In Ransom v. FIA Card Services, N.A. (2011), the Supreme Court read that word as a threshold eligibility test and held a debtor who owns a car outright, with no loan or lease payment, may not claim the vehicle-ownership allowance at all — a Standards figure applies only if the debtor will incur that kind of expense. Whether a given Standards line is available, and at what amount, is more contested in practice than "look it up on the table" suggests.

When do the dollar thresholds change, and by how much?

On a fixed statutory schedule, separate from the median-income figures. The adjustment itself is in 11 U.S.C. § 104(a): "on April 1, 1998, and at each 3-year interval ending on April 1 thereafter," every dollar amount in the listed sections — § 707(b) and § 1325(b) among them — is adjusted to reflect the change in the Consumer Price Index for All Urban Consumers over the most recent 3-year period and rounded to the nearest $25. Section 104(b) is a separate duty: it requires the Judicial Conference of the United States to publish the coming April 1 amounts in the Federal Register no later than the preceding March 1. The 2025 cycle applied a 13.2004% increase effective April 1, 2025, taking § 707(b)(2)(A)(i) from $9,075 to $10,275 and from $15,150 to $17,150, and the § 707(b)(6)–(7) per-person add-on from $825 to $925 per month. On the same 3-year interval, the next adjustment is due April 1, 2028. Section 104(c) keeps each adjustment from reaching cases commenced before its effective date.

That's a different clock from the state median figures used earlier. Those come from the Census Bureau, but the U.S. Trustee Program republishes them for bankruptcy use roughly twice a year — its recent notices applied updated median family income data to cases filed on or after November 1, 2025 and on or after April 1, 2026. A page or calculator using stale numbers from either source can misstate the result.

How does the means test set the length of a Chapter 13 plan?

The same median-income comparison reappears in Chapter 13, doing a different job. Under 11 U.S.C. § 1325(b)(4), the "applicable commitment period" for a plan is 3 years, unless the current monthly income of the debtor and the debtor's spouse combined, annualized, is not less than the same state median figures used in § 707(b) — in which case the period is "not less than 5 years." Either way, § 1322(d) caps a plan at 5 years, and § 1325(b)(4)(B) allows a shorter period if the plan pays all allowed unsecured claims in full.

Above-median income carries a second consequence in Chapter 13: § 1325(b)(3) requires "amounts reasonably necessary to be expended" — the deductions used to calculate disposable income for the plan — to follow the same § 707(b)(2)(A) and (B) standards as the Chapter 7 means test, not the debtor's actual expenses. A below-median Chapter 13 debtor isn't bound by that and can generally use actual reasonable expenses instead.

The two chapters don't split at the identical point. Chapter 7's protection under § 707(b)(7) runs to income "equal to or less than" the median, and § 1325(b)(3) imposes the § 707(b)(2) expense standards only on income "greater than" it — but § 1325(b)(4)(A)(ii) sets the 5-year commitment period at income "not less than" the median. A Chapter 13 household landing exactly on the median figure is therefore on the 5-year period while still using actual reasonable expenses.

Can a court still find abuse even when the formula doesn't presume it?

Yes. § 707(b)(3) picks up where the mechanical formula leaves off: "in a case in which the presumption in paragraph (2)(A)(i) does not arise or is rebutted," the court can still weigh whether the debtor filed in bad faith, or whether "the totality of the circumstances ... of the debtor's financial situation demonstrates abuse." That inquiry applies whether the formula never triggered because income was below the median, or because an above-median debtor ran the numbers and came in under the thresholds — passing the arithmetic isn't a guarantee against a later abuse challenge on other grounds, only against the formula itself.

The formula presumption can also be rebutted on its own terms. Under § 707(b)(2)(B), a debtor above the thresholds can rebut it by demonstrating "special circumstances, such as a serious medical condition or a call or order to active duty in the Armed Forces," itemized and verified under oath. And § 707(b)(2)(D) removes means testing altogether for a disabled veteran whose debt arose primarily during active duty or a homeland-defense activity, and for a reservist or National Guard member called to active duty after September 11, 2001, for the duration of an active-duty period or homeland-defense activity of at least 90 days plus the 540 days after it ends.

For what happens next if a Chapter 13 case is confirmed and a filer wants to finance a car mid-plan, see what a motion to incur debt is and the Chapter 13 car loan pillar page. For how eligibility questions like this fit into evaluating a post-bankruptcy auto loan more broadly, see are guaranteed-approval bankruptcy car loans real and the Chapter 7 car loan pillar page.

This is general information about how the means test works, not legal advice for a specific income situation. Whether a particular household clears or fails the formula, and whether special circumstances apply, are questions for the attorney and trustee handling that case.