Bankruptcy / Disability Social Security Income And Bankruptcy Means Test

Are Disability Benefits and Social Security Income Exempt From Bankruptcy Means Test?

Written by Ben Tejes
Updated Nov 27th, 2023
This article is for informational purposes only. Ascend does not provide legal advice, and are not attorneys. If you'd like to speak with a bankruptcy attorney that serves your city, you can speak with one in a free consultation.

The Chapter 7 bankruptcy means test is a crucial bankruptcy form used in Chapter 7 and Chapter 13 bankruptcy cases. 

How Chapter 7 Bankruptcy Means Test Works

The Chapter 7 Means Test determines whether a debtor meets the income requirements to be eligible for a bankruptcy discharge under Chapter 7. If your average yearly income is below your state’s median income level, you should be eligible to file for bankruptcy relief under Chapter 7. 

If your average yearly income amount is above your state’s median income level, you could still qualify for Chapter 7 if your disposable income is below a certain amount. The Chapter 7 Means Test also calculates disposable income. You can estimate whether you qualify for Chapter 7 by using our free Chapter 7 calculator.

We built a free Chapter 7 bankruptcy means test calculator below to use your income to estimate qualification using the bankruptcy means test.

Do I Include Social Security Income or Disability Income on the Means Test?

Income received under the Social Security Act is generally exempt from the Bankruptcy Means Test. Therefore, you would not include income from:

Social Security Retirement Income

Social Security retirement income is considered an asset instead of income. Therefore, you do not include the amount you receive each month for Social Security retirement. However, you can voluntarily include this amount if you want to file a Chapter 13 bankruptcy case and need this income to support a repayment play.

Have you estimated how much you will receive from Social Security if you have not yet retired? 

If not, feel free to take our free Social Security Calculator to estimate your total payout and estimated monthly payout.

Some individuals might file under Chapter 13 instead of filing a Chapter 7 case for various reasons. Examples of why someone might choose to use Social Security retirement funds to file under Chapter 13 include protecting assets from a Chapter 7 liquidation, avoiding foreclosure of their home, or repaying non-dischargeable tax debts over five years. 

Social Security Disability Income

SSDI (Social Security Disability Income) is generally not included in the calculations for the Means Test. These benefits are protected by federal law. SSDI benefits are paid to individuals who cannot work because of a disability that meets the definition of “disabled” as defined by the Social Security Administration.

Supplemental Security Income

SSI (Supplemental Security Income) is also not generally included in the Means Test calculations. These benefits are also protected by federal law. SSI benefits are paid to low-income disabled individuals who do not qualify for SSDI benefits.

State, Private, and Other Disability Income 

Generally, disability income from state disability programs, private companies, and other sources must be included in the Means Test calculations. However, because bankruptcy exemptions vary by state, it is wise to talk to a bankruptcy lawyer to determine whether your disability income is protected in a bankruptcy case.

We built a free Chapter 7 bankruptcy means test calculator below to use your income to estimate qualification using the bankruptcy means test.

How Chapter 13 Bankruptcy Means Test Works

A Chapter 7 bankruptcy may be more common for those who have social security and disability income, but let’s cover how it works in a Chapter 13 bankruptcy.

The Chapter 13 Means Test calculates your disposable income to determine how much money you have available to pay toward your unsecured debts through your Chapter 13 plan. Your disposable income is based on your average monthly income for the six months before filing bankruptcy. Disposable income is calculated by deducting allowed monthly expenses from your average monthly income.

The Chapter 13 Means Test also determines the minimum term of your Chapter 13 repayment plan. If your average annual income is below the state median income, you may file a 36-month plan. However, if your average annual income is above the state median income level, you must commit to a 60-month Chapter 13 plan.

Social Security Income 

In some cases, disability income could be included in a Chapter 13 Bankruptcy Means Test and budget. Local bankruptcy jurisdictions may have different rules regarding Social Security income. While the income may be exempt as an asset, some jurisdictions include Social Security income when calculating the Chapter 13 plan payment amount.

If you receive income from Social Security, including SS retirement, SSDI, or SSI, it is best to consult a bankruptcy lawyer in your area before filing a bankruptcy case. Make sure you discuss all sources of income with the bankruptcy attorney, including other sources of retirement and disability income. 

Income Included When Completing the Bankruptcy Means Test 

Let's cover income that is included in the bankruptcy means test.

Most household income must be included in the Means Test to calculate your average monthly income and average annual income. Examples of income that must be included when completing the Bankruptcy  Means Test include, but are not limited to:

  • Wages and salaries from employment
  • Overtime wages and bonuses
  • Commissions 
  • Tips
  • Investment income from bonds and stocks
  • Alimony or spousal support
  • Income from a business, including rental property 
  • State disability income
  • Part-time income or “side work”
  • Pension and retirement income
  • Unemployment income
  • Income regularly received from family members for support
  • Net income from a farm or profession
  • Income from dividends, interest, annuities, and royalties

If your spouse is not filing for bankruptcy relief with you, you must usually include your spouse’s income as “household income” on the Means Test. However, you are allowed to claim household expenses for each person in your household, even though your spouse is not filing for bankruptcy relief.


Hopefully, this article helps you understand whether disability benefits and social security income is exempt from the bankruptcy means test. In addition, you may now which income is included in the means test. 

Take the free bankruptcy means test calculator below to estimate qualification with your income.