How to Calculate the Chapter 7 Means Test

If you’re considering filing Chapter 7 bankruptcy, one of the first questions you’ll face is whether you pass the Chapter 7 means test. The means test determines whether you qualify to wipe out unsecured debts like credit cards, medical bills, and personal loans.

The good news? Many people qualify even if they think they make “too much.” Below is a simple, step-by-step guide on how the Chapter 7 means test is calculated and what really matters.

What Is the Chapter 7 Means Test?

The Chapter 7 means test is a two-part calculation created by Congress to prevent high-income filers from abusing Chapter 7 bankruptcy. It compares:

1. Your household income

2. Your allowable monthly expenses

The goal is to determine whether you have enough disposable income to repay creditors. If not, you qualify for Chapter 7.

Step 1: Determine Your Household Size

Household size is critical because income limits increase with each household member.

In Florida, household size is not based solely on who you live with. Instead, courts look at financial dependence.

Your household may include:

• A spouse

• Children

• Elderly parents or relatives you financially support

• Anyone whose income and expenses are financially intertwined with yours

Even if you live with family members, you may still be considered a one-person household depending on finances.

Step 2: Calculate Your Current Monthly Income (CMI)

Your Current Monthly Income is the average of all gross income received in the last 6 full calendar months before filing.

This includes:

• Wages and salary (before taxes)

• Overtime, bonuses, and commissions

• Rental income

• Business income

• Pension or retirement income

• Unemployment benefits

Income That Is Not Included

• Social Security benefits

• Certain disability benefits

• VA disability compensation (in many cases)

Once the six-month average is calculated, it is multiplied by 12 to create your annualized income.

Step 3: Compare Your Income to Florida’s Median Income

Your annualized income is compared to Florida’s median income for your household size.

• Below the median? You automatically pass the means test.

• Above the median? You move on to Part 2 of the test.

Many people stop here unnecessarily. Being above the median does not mean you are disqualified.

Step 4: Subtract Allowed Expenses (Part 2 of the Means Test)

If your income exceeds the median, the means test allows you to deduct approved expenses to determine your monthly disposable income.

These deductions include:

Standard Allowable Expenses

• Food, clothing, and household supplies

• Transportation costs

• Health care expenses

• Utilities and housing allowances

Actual Monthly Expenses

• Mortgage or rent

• Car payments

• Car insurance

• Child support or alimony

• Health insurance premiums

• Taxes

• Mandatory retirement contributions

These expenses often reduce income significantly, even for higher-earning households.

Step 5: Calculate Disposable Income

After subtracting allowable expenses, the court looks at your remaining disposable income.

• If your disposable income is low or negative, you pass the means test.

• If the amount suggests you could repay creditors, Chapter 7 may be denied and Chapter 13 considered instead.

In practice, many people above the income limit still qualify once expenses are properly calculated.

Common Mistakes When Calculating the Means Test

• Using net income instead of gross income

• Miscalculating household size

• Forgetting allowable deductions

• Assuming overtime or bonuses permanently disqualify you

• Not accounting for recent job loss or income reduction

A properly prepared means test can make the difference between approval and denial.

Why the Chapter 7 Means Test Is Not a DIY Calculation

The means test is highly technical, and small errors can:

• Delay your case

• Trigger objections from the trustee

• Force you into Chapter 13 unnecessarily

At chapter7tampa.com, we routinely help clients qualify for Chapter 7 even when they initially believe they make too much money.

Get Help Calculating Your Chapter 7 Means Test

If you’re unsure whether you qualify for Chapter 7 bankruptcy in Tampa or anywhere in Florida, we can help.

A proper review of:

• Income timing

• Household size

• Allowable deductions

often changes the outcome.

Contact chapter7tampa.com today for a free consultation and find out whether you pass the Chapter 7 means test before ruling yourself out.