Income thresholds, the means test, and what qualifies you to file Chapter 7 or Chapter 13.
Most people considering bankruptcy worry about qualifying. The good news: people who are genuinely struggling with debt almost always have a path forward. What differs is which chapter you can file — and that comes down to a few specific tests, not a general judgment about whether you "deserve" relief.
Two chapters serve personal bankruptcy: Chapter 7 eliminates qualifying debts in a matter of months, and Chapter 13 restructures debts into a 3-to-5-year repayment plan. Your income, expenses, and circumstances determine which option fits.
Most filers meet all four without difficulty. An attorney confirms each one during your no-obligation consultation.
If your household income falls below your state's median for your family size, you automatically qualify for Chapter 7 without further testing. The median is updated regularly and varies by state and household size.
Above-median earners complete a means test — a calculation of disposable income after allowed living expenses. Many people above the median still qualify for Chapter 7 once expenses like housing, transportation, and healthcare are counted.
You must wait 8 years from a prior Chapter 7 discharge before filing Chapter 7 again, or 4 years between a Chapter 7 discharge and a Chapter 13 filing. Most people have no prior filing at all.
You must complete an approved credit counseling course within 180 days before filing. Most courses are offered online, take about an hour, and cost $15–$50. Your attorney will recommend a provider.
If your income is too high to pass the means test, Chapter 13 is typically the answer. Chapter 13 has no income cap — it's based on having regular income sufficient to fund a repayment plan. It also offers advantages Chapter 7 doesn't, especially if you need to stop a foreclosure and catch up on missed mortgage payments.
Other factors — debt types, prior filings, asset values — can affect which chapter you file or whether bankruptcy is the right tool at all. Some debts (like recent tax debt and most student loans) are generally not dischargeable. Filing costs also factor into the decision. An attorney can review your full picture in a no-obligation consultation and tell you, specifically, which options apply to your situation.
The U.S. Trustee publishes state median incomes by household size, updated twice a year. For a household of one, it's a specific dollar figure; for two, it's higher; and so on. Medians also vary significantly between states. Your attorney will confirm the current median for your state and household size during your consultation.
Disposable income is gross income minus allowed living expenses — housing, transportation, food, healthcare, insurance, taxes, and others set by IRS standards. The calculation is specific and often comes out lower than people expect, which is why many above-median earners still qualify for Chapter 7.
Generally yes for the means test, though there are adjustments for expenses your spouse pays and for cases where spouses are separated. Filing jointly is often simpler when both spouses have debts, but solo filings are common and valid.
No. State bankruptcy exemptions protect equity in your primary residence and vehicle up to specified limits, and most filers keep both through the process. Exemption amounts vary by state. Owning property affects the details of your case but not your ability to file.
Our attorneys can walk through your income, debts, and options in a confidential call. No obligation.