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If you want to file for bankruptcy relief, one of the first things that you must determine is whether you meet the income limit for Chapter 7. Chapter 7 might the quickest, easiest, and the least costly chapter of bankruptcy to file. However, debtors (people who file for bankruptcy relief) must meet the Chapter 7 income qualifications to receive a bankruptcy discharge. The bankruptcy discharge is why you file a bankruptcy case. A discharge releases you from the legal responsibility to repay a day. Without a discharge, you owe your debts as if you never filed for bankruptcy relief. 

Understanding the Income Limit for Chapter 7 Bankruptcy Cases

Congress added an income limit for Chapter 7 when it revised bankruptcy laws in 2005. BAPCPA (the Bankruptcy Abuse Prevention and Consumer Protection Act) changed the way debtors qualified for a bankruptcy discharge in Chapter 7. The purpose of the chance was to prevent bankruptcy abuse by limiting Chapter 7 cases to individuals who could not afford to repay any portion of their unsecured debts.

Why Income Limits Are Important in Chapter 7 Cases

The income limits in Chapter 7 can prevent you from receiving a bankruptcy discharge if you file Chapter 7. The income limit for Chapter 7 does not prevent you from filing a Chapter 7 bankruptcy case. You can file for Chapter 7 regardless of how much money you earn.

However, if your income exceeds the Chapter 7 income limits, you may not be eligible to receive a bankruptcy discharge. In other words, your bankruptcy filing does not result in debt relief. The court can deny your bankruptcy discharge based on abuse. 

When your income exceeds the maximum income for Chapter 7 cases, you need to file under Chapter 13 to receive a bankruptcy discharge. The assumption is that if your income is higher than the maximum income for Chapter 7, you can afford to pay a percentage of what you owe to your unsecured creditors. 

Unsecured creditors do not have liens on your property. Examples of unsecured debts included credit cards, personal loans, and medical bills.

How to Calculate Income for the Chapter 7 Means Test

The first step is to gather proof of income for the past six months. Income for the Chapter 7 means test is based on income for the six months before you file your Chapter 7 cases. Therefore, if you file your Chapter 7 bankruptcy petition on July 15, you need to report all income from January 1 through June 30. 

Income includes income earned and income received from all other sources, except income from the Social Security Act. Income received from Social Security retirement income, SSDI, and SSI are not included in income for the Chapter 7 Means Test.

Examples of income used for the Chapter 7 Means Test include:

  • Wages and salaries, including overtime, bonuses, and commissions
  • Net income from self-employment or operation of a business
  • Net income from rental property
  • Unemployment income
  • Workers’ compensation income
  • Interest, royalties, and dividends
  • Annuities, retirement income, and pensions
  • Private disability insurance income
  • Child support and spousal support
  • Regular income contributed by another person for household expenses, such as a non-filing spouse’s income and money from a roommate, domestic partner, parent, or friend

Completing the Means Test

Section One – Median Income

There are two terms you need to understand when completing the first part of the Chapter 7 Means Test — current monthly income (CMI) and annual median income. Annual median income is based on your CMI. To calculate CMI, all income received during the six months before filing Chapter 7 and divide by six. Therefore, if your income for six months is $25,000, your current monthly income equals $4,166.67 ($25,000 divided by 6).

Annual median income is calculated by multiplying CMI by 12. In the example above, median income is $50,000.04 ($4,166.67 x 12). Your annual median income is compared to the annual median income for your state (see our chart below). If your median income is lower than the median income for your state, you are presumptively eligible for a bankruptcy discharge under Chapter 7. In other words, you can receive debt forgiveness in Chapter 7 if you meet the other requirements for filing Chapter 7.  Please see the annual income calculator below to estimate your average income.

Once you understand your median income, you may want to take a Chapter 7 means test calculator to estimate whether you qualify for a Chapter 7 bankruptcy. You can use the calculator below to estimate your qualification.

Section Two – Statement of Exemption from Presumption of Abuse

There are certain provisions that may exempt you from the means test altogether. These are related to whether the debts are consumer related and whether you are a disabled veteran or whether you are or have been a member of the National Guard or a Reservist. See the bankruptcy form, “Statement of Exemption from Presumption of Abuse Under §707(b)(2)” for more information.

Section Three – Disposable Income

If you earn too much income to qualify for Chapter 7 under the median income test, you could qualify for Chapter 7 under the disposable income test. Disposable income is the amount of money you have each month after deducting your ordinary living expenses and mandatory payroll deductions. In Chapter 13 cases, you must include disposable income in your Chapter 13 plan.

In a Chapter 7 case, if your disposable income is below a certain level, you can still qualify for a bankruptcy discharge even though your annual median income is higher than the income limit for Chapter 7. Examples of expenses that may be deducted from CMI to calculate disposable income include:

  • Required payroll deductions, such as payroll taxes, uniforms, union dues, and mandatory retirement savings
  • Food, clothing, and household expenses
  • Car payments, rent, lease payments, and mortgage payments
  • Out of pocket health care costs
  • Health insurance, term life insurance, and disability insurance premiums
  • Childcare costs and school expenses for minor children
  • Vehicle operating costs or public transportation costs
  • Court-ordered child support or alimony payments

The expenses are based on how many people live in your home. Also, some monthly expenses are limited and based on national standards for living expenses. Some of your monthly expenses may not be used, such as expensive memberships to gyms or golf clubs. Also, if your expenses exceed “normal” amounts, you may need to justify and provide proof of the expense. For example, your health care costs are very high because your child has a disability.

What Is Your Income Limit for Chapter 7?

You can also use our Chapter 7 Bankruptcy Means Test Calculator to see if you qualify for Chapter 7. For additional information about Chapter 7 cases or to find a Chapter 7 attorney near you, contact Ascend. You can call or text us at 833-272-3631 if you have questions or need help.

If you are interested in filing Chapter 7, check your income limit for Chapter 7 in the table below by your state. List is in state alphabetical order. All of these figures are for bankruptcy filings on or after May 1, 2020 based on means testing data. Please note that you would add $9,000 for each household size greater than 9 persons.

Alaska Chapter 7 Bankruptcy Income Limits

# of PeopleAnnual Income
1$63,997
2$77,589
3$102,315
4$103,055
5$112,055
6$121,055
7$130,055
8$139,055
9$148,055

Alabama Chapter 7 Bankruptcy Income Limits

# of PeopleAnnual Income
1$48,544
2$56,918
3$68,554
4$82,991
5$91,991
6$100,991
7$109,991
8$118,991
9$127,991

Arkansas Chapter 7 Bankruptcy Income Limits

# of PeopleAnnual Income
1$43,230
2$53,946
3$58,258
4$74,086
5$83,086
6$92,086
7$101,086
8$110,086
9$119,086

Arizona Chapter 7 Bankruptcy Income Limits

# of PeopleAnnual Income
1$52,319
2$65,713
3$71,704
4$86,950
5$95,950
6$104,950
7$113,950
8$122,950
9$131,950

California Chapter 7 Bankruptcy Income Limits

# of PeopleAnnual Income
1$60,360
2$79,271
3$88,235
4$101,315
5$110,315
6$119,315
7$128,315
8$137,315
9$146,315

Colorado Chapter 7 Bankruptcy Income Limits

# of PeopleAnnual Income
1$61,921
2$81,155
3$94,193
4$107,867
5$116,867
6$125,867
7$134,867
8$143,867
9$152,867

Connecticut Chapter 7 Bankruptcy Income Limits

# of PeopleAnnual Income
1$66,689
2$88,594
3$101,666
4$125,714
5$134,714
6$143,714
7$152,714
8$161,714
9$170,714

District of Columbia Chapter 7 Bankruptcy Income Limits

# of PeopleAnnual Income
1$63,414
2$115,082
3$129,777
4$140,615
5$149,615
6$158,615
7$167,615
8$176,615
9$185,615

Delaware Chapter 7 Bankruptcy Income Limits

# of PeopleAnnual Income
1$55,578
2$72,644
3$84,584
4$102,625
5$111,625
6$120,625
7$129,625
8$138,625
9$147,625

Florida Chapter 7 Bankruptcy Income Limits

# of PeopleAnnual Income
1$51,559
2$62,736
3$68,944
4$82,560
5$91,560
6$100,560
7$109,560
8$118,560
9$127,560

Georgia Chapter 7 Bankruptcy Income Limits

# of PeopleAnnual Income
1$50,128
2$65,007
3$73,738
4$87,317
5$96,317
6$105,317
7$114,317
8$123,317
9$132,317

Hawaii Chapter 7 Bankruptcy Income Limits

# of PeopleAnnual Income
1$65,977
2$77,621
3$100,620
4$114,381
5$123,381
6$132,381
7$141,381
8$150,381
9$159,381

Iowa Chapter 7 Bankruptcy Income Limits

# of PeopleAnnual Income
1$51,579
2$69,127
3$78,930
4$95,581
5$104,581
6$113,581
7$122,581
8$131,581
9$140,581

Idaho Chapter 7 Bankruptcy Income Limits

# of PeopleAnnual Income
1$52,117
2$61,916
3$67,422
4$77,923
5$86,923
6$95,923
7$104,923
8$113,923
9$122,923

Illinois Chapter 7 Bankruptcy Income Limits

# of PeopleAnnual Income
1$54,877
2$72,593
3$83,759
4$103,074
5$112,074
6$121,074
7$130,074
8$139,074
9$148,074

Indiana Chapter 7 Bankruptcy Income Limits

# of PeopleAnnual Income
1$48,834
2$62,931
3$73,537
4$87,636
5$96,636
6$105,636
7$114,636
8$123,636
9$132,636

Kansas Chapter 7 Bankruptcy Income Limits

# of PeopleAnnual Income
1$51,867
2$67,221
3$76,999
4$88,698
5$97,698
6$106,698
7$115,698
8$124,698
9$133,698

Kentucky Chapter 7 Bankruptcy Income Limits

# of PeopleAnnual Income
1$44,594
2$56,257
3$66,732
4$80,115
5$89,115
6$98,115
7$107,115
8$116,115
9$125,115

Louisiana Chapter 7 Bankruptcy Income Limits

# of PeopleAnnual Income
1$45,634
2$55,410
3$63,039
4$82,282
5$91,282
6$100,282
7$109,282
8$118,282
9$127,282

Massachusetts Chapter 7 Bankruptcy Income Limits

# of PeopleAnnual Income
1$67,119
2$84,125
3$108,130
4$134,418
5$143,418
6$152,418
7$161,418
8$170,418
9$179,418

Maryland Chapter 7 Bankruptcy Income Limits

# of PeopleAnnual Income
1$70,789
2$90,424
3$106,282
4$128,272
5$137,272
6$146,272
7$155,272
8$164,272
9$173,272

Maine Chapter 7 Bankruptcy Income Limits

# of PeopleAnnual Income
1$51,453
2$64,889
3$78,379
4$95,614
5$104,614
6$113,614
7$122,614
8$131,614
9$140,614

Michigan Chapter 7 Bankruptcy Income Limits

# of PeopleAnnual Income
1$53,113
2$64,428
3$78,217
4$93,653
5$102,653
6$111,653
7$120,653
8$129,653
9$138,653

Minnesota Chapter 7 Bankruptcy Income Limits

# of PeopleAnnual Income
1$58,050
2$77,702
3$97,657
4$114,326
5$123,326
6$132,326
7$141,326
8$150,326
9$159,326

Missouri Chapter 7 Bankruptcy Income Limits

# of PeopleAnnual Income
1$49,086
2$61,519
3$73,857
4$92,129
5$101,129
6$110,129
7$119,129
8$128,129
9$137,129

Mississippi Chapter 7 Bankruptcy Income Limits

# of PeopleAnnual Income
1$42,414
2$51,904
3$58,472
4$69,732
5$78,732
6$87,732
7$96,732
8$105,732
9$114,732

Montana Chapter 7 Bankruptcy Income Limits

# of PeopleAnnual Income
1$51,074
2$64,425
3$74,919
4$87,293
5$96,293
6$105,293
7$114,293
8$123,293
9$132,293

North Carolina Chapter 7 Bankruptcy Income Limits

# of PeopleAnnual Income
1$48,772
2$62,050
3$69,162
4$87,505
5$96,505
6$105,505
7$114,505
8$123,505
9$132,505

North Dakota Chapter 7 Bankruptcy Income Limits

# of PeopleAnnual Income
1$53,306
2$80,899
3$87,824
4$99,327
5$108,327
6$117,327
7$126,327
8$135,327
9$144,327

Nebraska Chapter 7 Bankruptcy Income Limits

# of PeopleAnnual Income
1$49,680
2$69,294
3$78,674
4$95,445
5$104,445
6$113,445
7$122,445
8$131,445
9$140,445

New Hampshire Chapter 7 Bankruptcy Income Limits

# of PeopleAnnual Income
1$66,585
2$80,429
3$102,095
4$122,523
5$131,523
6$140,523
7$149,523
8$158,523
9$167,523

New Jersey Chapter 7 Bankruptcy Income Limits

# of PeopleAnnual Income
1$69,705
2$83,739
3$106,650
4$131,331
5$140,331
6$149,331
7$158,331
8$167,331
9$176,331

New Mexico Chapter 7 Bankruptcy Income Limits

# of PeopleAnnual Income
1$45,645
2$56,327
3$60,617
4$67,560
5$76,560
6$85,560
7$94,560
8$103,560
9$112,560

Nevada Chapter 7 Bankruptcy Income Limits

# of PeopleAnnual Income
1$52,449
2$65,756
3$74,856
4$81,528
5$90,528
6$99,528
7$108,528
8$117,528
9$126,528

New York Chapter 7 Bankruptcy Income Limits

# of PeopleAnnual Income
1$57,137
2$72,642
3$88,240
4$107,550
5$116,550
6$125,550
7$134,550
8$143,550
9$152,550

Ohio Chapter 7 Bankruptcy Income Limits

# of PeopleAnnual Income
1$51,297
2$64,665
3$77,642
4$93,239
5$102,239
6$111,239
7$120,239
8$129,239
9$138,239

Oklahoma Chapter 7 Bankruptcy Income Limits

# of PeopleAnnual Income
1$49,198
2$59,495
3$66,585
4$76,691
5$85,691
6$94,691
7$103,691
8$112,691
9$121,691

Oregon Chapter 7 Bankruptcy Income Limits

# of PeopleAnnual Income
1$56,957
2$71,838
3$80,698
4$99,074
5$108,074
6$117,074
7$126,074
8$135,074
9$144,074

Pennsylvania Chapter 7 Bankruptcy Income Limits

# of PeopleAnnual Income
1$54,605
2$67,540
3$83,868
4$103,316
5$112,316
6$121,316
7$130,316
8$139,316
9$148,316

Rhode Island Chapter 7 Bankruptcy Income Limits

# of PeopleAnnual Income
1$61,706
2$75,858
3$85,100
4$104,833
5$113,833
6$122,833
7$131,833
8$140,833
9$149,833

South Carolina Chapter 7 Bankruptcy Income Limits

# of PeopleAnnual Income
1$47,487
2$61,529
3$66,595
4$81,226
5$90,226
6$99,226
7$108,226
8$117,226
9$126,226

South Dakota Chapter 7 Bankruptcy Income Limits

# of PeopleAnnual Income
1$47,906
2$69,046
3$70,326
4$83,823
5$92,823
6$101,823
7$110,823
8$119,823
9$128,823

Tennessee Chapter 7 Bankruptcy Income Limits

# of PeopleAnnual Income
1$48,219
2$60,913
3$69,734
4$79,701
5$88,701
6$97,701
7$106,701
8$115,701
9$124,701

Texas Chapter 7 Bankruptcy Income Limits

# of PeopleAnnual Income
1$50,902
2$66,899
3$73,948
4$86,259
5$95,259
6$104,259
7$113,259
8$122,259
9$131,259

Utah Chapter 7 Bankruptcy Income Limits

# of PeopleAnnual Income
1$64,806
2$69,006
3$82,638
4$93,474
5$102,474
6$111,474
7$120,474
8$129,474
9$138,474

Virginia Chapter 7 Bankruptcy Income Limits

# of PeopleAnnual Income
1$62,029
2$79,412
3$91,995
4$111,993
5$120,993
6$129,993
7$138,993
8$147,993
9$156,993

Vermont Chapter 7 Bankruptcy Income Limits

# of PeopleAnnual Income
1$57,859
2$75,602
3$81,686
4$103,627
5$112,627
6$121,627
7$130,627
8$139,627
9$148,627

Washington Chapter 7 Bankruptcy Income Limits

# of PeopleAnnual Income
1$67,511
2$80,251
3$92,568
4$107,481
5$116,481
6$125,481
7$134,481
8$143,481
9$152,481

Wisconsin Chapter 7 Bankruptcy Income Limits

# of PeopleAnnual Income
1$52,730
2$68,363
3$83,607
4$100,098
5$109,098
6$118,098
7$127,098
8$136,098
9$145,098

West Virginia Chapter 7 Bankruptcy Income Limits

# of PeopleAnnual Income
1$49,056
2$52,028
3$64,281
4$76,273
5$85,273
6$94,273
7$103,273
8$112,273
9$121,273

Wyoming Chapter 7 Bankruptcy Income Limits

# of PeopleAnnual Income
1$62,090
2$74,286
3$78,310
4$97,862
5$106,862
6$115,862
7$124,862
8$133,862
9$142,862

Post Author: Ben Tejes

Ben Tejes is a co-founder and CEO of Ascend Finance. Before Ascend, Ben held various executive roles at personal finance companies. Ben specializes in Chapter 13 Bankruptcy, Debt Settlement, Chapter 7 Bankruptcy and debt payoff methods. In his free time, Ben enjoys spending time going on adventures with his wife and three young daughters.

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