Bankruptcy Means Test Calculator

The median income threshold serves as a baseline to determine if your income is low enough to potentially qualify for Chapter 7 bankruptcy. It varies based on household size and geographic region. If your annual income is below this threshold, you may automatically pass the means test. However, if your income exceeds the median, further calculations involving your disposable income are required to assess eligibility.

Disposable income is calculated by subtracting allowable monthly expenses from your total monthly income. This figure represents the amount of money you have left over after covering essential costs such as housing, utilities, and food. It is crucial because it determines whether you have sufficient funds to repay creditors under a Chapter 13 repayment plan. If your disposable income is low, you are more likely to qualify for Chapter 7 bankruptcy.

Household size directly affects the median income threshold used in the means test. Larger households typically have higher median income limits, reflecting the increased cost of living for more dependents. For example, a single individual may have a lower threshold compared to a family of four. Accurately reporting your household size is critical to ensure the calculation reflects your financial reality.

One common misconception is that high income automatically disqualifies you from Chapter 7 bankruptcy. In reality, even individuals with above-median income may qualify if their disposable income is low due to significant allowable expenses. Another misconception is that all debts are discharged under Chapter 7; however, certain debts, such as student loans and child support, are typically non-dischargeable.

Regional variations, such as differences in median income thresholds and allowable expense standards, can significantly impact the means test results. This calculator uses a simplified, universal approach that may not account for specific local laws. For precise results, you should consult local guidelines or a bankruptcy attorney familiar with your region's regulations.

The 60-month disposable income calculation multiplies your monthly disposable income by 60 to estimate how much you could pay creditors over five years. This figure is used to assess whether you have enough resources to fund a Chapter 13 repayment plan. If the total amount exceeds certain thresholds, you may be required to file under Chapter 13 rather than Chapter 7.

To improve your chances, ensure that you accurately document all allowable expenses, as these can significantly reduce your disposable income. Review your financial records for overlooked deductions, such as medical expenses or childcare costs. Additionally, consult a bankruptcy attorney to identify any regional guidelines or strategies that may strengthen your case.

While a means test calculator provides a useful starting point, it cannot account for complex legal nuances, regional variations, or changes in your financial situation. A bankruptcy attorney can provide tailored advice, ensure compliance with local laws, and help you navigate the filing process to maximize your chances of a successful outcome.