Debt relief glossary
Means test
The two-part income and expense formula that determines whether you qualify for Chapter 7.
The bankruptcy means test, introduced by BAPCPA in 2005, is a two-part calculation that determines whether a debtor qualifies for Chapter 7 (liquidation) bankruptcy or must file under Chapter 13 (repayment plan). Part 1 compares your 6-month average monthly income multiplied by 12 to your state's median income for your household size. If below the median, you automatically pass. If above, Part 2 subtracts IRS-defined expense standards and actual secured debt payments from your monthly income. If the resulting monthly disposable income falls below a threshold (roughly $217/month or $13,020/year — the amounts are inflation-adjusted), you still qualify for Chapter 7.