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The bankruptcy means test uses the average gross monthly income derived from all different sources for 6 full months before you file your bankruptcy. You can find this information in the bankruptcy form titled Chapter 7 Statement of Your Current Monthly Income.

Below is the exact language for the calculator and for gross income from the bankruptcy form:

  1. Fill in the average monthly income that you received from all sources, derived during the 6 full months before you file this
    bankruptcy case. 11 U.S.C. § 101(10A). For example, if you are filing on September 15, the 6-month period would be March 1 through
    August 31. If the amount of your monthly income varied during the 6 months, add the income for all 6 months and divide the total by 6. Fill in the result. Do not include any income amount more than once. For example, if both spouses own the same rental property, put the income from that property in one column only. If you have nothing to report for any line, write $0 in the space.
  2. Your gross wages, salary, tips, bonuses, overtime, and commissions (before all payroll deductions).

1) How do you calculate your average income for the bankruptcy means test?

The statement above to calculate average monthly income can be confusing. Which month do you use and how do you calculate to make sure that you take the average. As such, we built a tool that a bankruptcy attorney recommend to help you estimate how much your average monthly income is for a 6 month period.

The next step is to take the average income you found below and use a bankruptcy means test calculator such as the one below to estimate whether you may qualify for a Chapter 7 bankruptcy. The calculator below takes into consideration your state, your household sizeand the means-testing data for cases filed on or after May 1, 2020.

2) Where do I use the average income to estimate bankruptcy means test qualification?

Now that you have your average income amount, you can now plug that number in the bankruptcy means test calculator below to estimate whether you pass the bankruptcy means test. If your results are above the median, you may want to look at the third step.

3) What if the calculator results state “may or may not qualify” for Chapter 7?

Your income may be slightly above the median by up to $20,000. There may be a chance to still qualify for a Chapter 7 bankruptcy when your income is above the median amount for your state and household size. There are two forms that can be used here, and it’s often referred to as Part 2 of the Means Test: 1) Statement of Exemption from Presumption of Abuse Under §707(b)(2) 2) Chapter 7 Means Test Calculation.

Thankfully, the calculations are form based as well. We wanted to simplify the process, so we also built a Chapter 7 Above Median Calculator which you can access below.

Chapter 7 Above Median Calculator

4) What if the Above Median Calculator results state “may not qualify?”

At this point, you may want to research alternative options or still have a consultation with a bankruptcy attorney as there are certain things about each bankruptcy district that is unique. You may also be interested to review such options as debt payoff planning, debt settlement or debt management. If you are interested in any of these options, please contact us if you have any questions whatsoever. We specialize in finding the best programs for each of the different services.

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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