What the means test is for
Congress added the means test in 2005 to stop debtors who could afford to repay something from wiping out their debts in Chapter 7. It works by creating a presumption of abuse: if your numbers come out a certain way, the court presumes that filing Chapter 7 would be an abuse of the system, and unless you rebut it with special circumstances the case is dismissed or converted to Chapter 13, where you repay creditors out of income over three to five years.
The test is mechanical, and that is deliberate. It does not ask whether your budget is reasonable or whether your creditors behaved well. It asks two arithmetic questions, in order, and stops as soon as one of them is answered in your favour.
The first question is whether your annualised current monthly income is at or below the median family income for your household size in your state. Most people who file are below it, and for them the test is over: no presumption arises, and the second half of Official Form 122A is not completed at all. The second question, for everyone above the median, is whether after allowed expenses there is enough left over to make a repayment plan worth running.
Current monthly income, and why it is not your income
Current monthly income is a defined term, and it catches people out. It is the average monthly income of the debtor and, in a joint case, the spouse, over the six full calendar months before the month of filing. Not the last six months from today. Not last year's tax return. Six full calendar months, which means the month you file in is excluded entirely.
Three consequences follow. A bonus paid seven months ago is invisible; a bonus paid five months ago counts at one sixth of its value every month. Somebody who lost a job four months ago still has four months of full salary in the average, which is why waiting a month or two before filing can change the answer. And regular contributions to household expenses from anyone else in the house count, even from someone who is not filing. Social Security benefits are excluded by statute.
The expense side is equally artificial. You do not deduct what you spend. You deduct what the IRS Collection Financial Standards say a household of your size in your county is allowed for food, clothing, housing and transport, plus certain actual expenses the form permits. Someone whose real spending is far above the standards gets no credit for it; someone frugal deducts the standard anyway. Secured debt payments are deducted at their contractual amount averaged over sixty months, and priority debts — recent income taxes, domestic support arrears — are divided by sixty and deducted monthly.
What is left is monthly disposable income. Multiply by sixty and you have the number the statute tests. Two dollar thresholds bracket the answer: below the lower one no presumption arises whatever your debts; at or above the upper one the presumption arises whatever your debts; between them the presumption arises only if the sixty-month figure is at least 25% of your nonpriority unsecured debt. Those two dollar figures are adjusted for inflation every three years, which is why they are inputs here rather than constants.
Worked example: $96,000 a year against a $92,000 median
A household of three received $48,000 in the six full calendar months before filing. The state median for a household of three is $92,000. Allowed expenses come to $4,300 a month, secured payments on the mortgage and one car average $2,100, priority debts total $6,000, and nonpriority unsecured debt is $55,000.
- Current monthly income. $48,000 ÷ 6 = $8,000.
- Annualise. $8,000 × 12 = $96,000.
- Compare with the median. $96,000 − $92,000 = $4,000 above. The first stage does not save this filer, so the second stage runs.
- Spread the priority debt. $6,000 ÷ 60 = $100 a month.
- Disposable income. $8,000 − $4,300 − $2,100 − $100 = $1,500 a month.
- Sixty months of it. $1,500 × 60 = $90,000.
- Test it. $90,000 is far above any plausible upper threshold, so the presumption of abuse arises and Chapter 7 is unlikely without rebutting it. As a share of the unsecured debt it is 90,000 ÷ 55,000 = 163.64%, meaning a five-year plan could in principle repay the unsecured creditors in full.
Notice how tight this is. Being $4,000 a year above the median — $333 a month — is what forces the second stage at all. If the same household's six-month income had been $45,900 instead of $48,000, annualised income would be $91,800, below the median, and the analysis would have stopped at step three regardless of the $1,500 of monthly surplus.
How to read the result
If the median comparison is negative, that is the whole answer: no presumption arises, and the disposable-income figures on this page are informational only. They still matter for a different reason — if you end up in Chapter 13 by choice or because of asset issues, disposable income sets the floor for what unsecured creditors must receive.
If the comparison is positive, look at the sixty-month total against your two thresholds, and then at the percentage-of-unsecured-debt figure, which only decides anything in the band between them. A filer with a modest surplus and a very large unsecured debt can pass the test in the middle band, because the 25% test scales with the debt.
The sensitivity table is the most useful part of this page for planning. Every $250 of additional allowed monthly expense removes $15,000 from the sixty-month total, because sixty times 250 is 15,000. That is why the expense side of Form 122A-2 is where the real work happens: the difference between a defensible and an indefensible characterisation of a vehicle-ownership allowance or a health insurance deduction routinely swings the result. It is also why passing or failing on paper is rarely the end of the conversation with an attorney.
Finally, remember what a presumption is. It is rebuttable under 11 U.S.C. 707(b)(2)(B) by showing special circumstances — a serious medical condition, a call to active duty — that justify additional expenses or income adjustments with no reasonable alternative. Rebuttal requires itemised documentation and a sworn statement, and it succeeds often enough to be worth attempting.
What each part of the test does
| Stage | Question | If answered in your favour |
|---|---|---|
| 1. Median comparison | Is annualised current monthly income at or below the state median for your household size? | No presumption. Form 122A-2 is not required. |
| 2. Lower threshold | Is sixty months of disposable income below the lower dollar threshold? | No presumption, whatever the size of the debt. |
| 3. Upper threshold | Is sixty months of disposable income at or above the upper dollar threshold? | Presumption arises, whatever the size of the debt. |
| 4. The 25% test | Between the thresholds, is sixty months of disposable income at least 25% of nonpriority unsecured debt? | No presumption if it is below 25%. |
| 5. Rebuttal | Are there special circumstances with no reasonable alternative? | Presumption rebutted, with documentation. |
Structure taken from 11 U.S.C. 707(b)(2) and Official Forms 122A-1 and 122A-2. The dollar thresholds in stages 2 and 3 are adjusted every three years.
Where means test calculations go wrong
- Using the wrong six months. The lookback is the six full calendar months before the month of filing. Including the filing month, or counting back from today's date, changes the average and can change the outcome.
- Deducting actual expenses instead of the standards. The test uses IRS national and local standards for most categories. Your real grocery bill is irrelevant to the arithmetic even if it is entirely reasonable.
- Including Social Security in income. Social Security benefits are excluded from current monthly income by statute. Including them can push a filer over the median who is not over it.
- Omitting a non-filing household member's contributions. Regular contributions toward household expenses count, whether or not that person is filing.
- Forgetting that passing the means test is not the whole eligibility question. Nonexempt assets, prior filings, credit counselling requirements and the good-faith standard all sit outside this arithmetic.
- Treating the thresholds as fixed. They move every three years. A calculation done against last cycle's figures can be wrong at the margin.
What happens after the test
Passing the test opens the door to Chapter 7, in which nonexempt assets are liquidated and dischargeable debts are wiped out, usually within a few months. Failing it points toward Chapter 13, in which you keep your property and pay disposable income into a plan for three to five years, with any remaining dischargeable balance forgiven at the end. The implied plan payment on this page is the starting point for that arithmetic: unsecured creditors must receive at least the disposable income figure, and at least what they would have received in a Chapter 7 liquidation.
Before either, it is worth pricing the alternative. The debt settlement versus bankruptcy cost calculator compares negotiated settlement, including the tax on forgiven debt, against the cash cost of filing. For debts that are large but not hopeless, a structured payoff can be cheaper than either: see the debt avalanche calculator and the debt snowball calculator for the two ordering strategies, and the credit card payoff calculator for a single balance.
Two things bankruptcy does not touch are worth knowing before you plan around it: most student loans survive discharge absent an undue-hardship finding, and recent income taxes are priority debts that must be paid in full through a plan. A filer whose debt is mostly one of those two categories gets much less relief than the headline promise suggests, which is why the composition of the debt matters as much as its size. Check your overall position first with a debt-to-income ratio calculator.
This is a screening tool, not Form 122A
The official forms run to several pages and contain dozens of line items this page compresses into four inputs: separate treatment of vehicle operation and ownership allowances, health and disability insurance, court-ordered payments, education for a disabled child, charitable contributions, and administrative expenses in a Chapter 13. Any one of them can change the outcome. Use this to see roughly where you stand and what would move the number, then have the real form prepared by someone who does it for a living.