What Is the Bankruptcy Means Test? And How to Pass the Means Test for Chapter 7

If you’ve started researching bankruptcy, you’ve probably come across the term “means test”—and maybe even felt a little confused or overwhelmed. You’re not alone. The means test is one of the most talked-about (and misunderstood) parts of filing for Chapter 7 bankruptcy. It’s a formula used to determine whether you qualify for Chapter 7 based on your income and certain expenses. For most people, passing the means test is the key that unlocks Chapter 7 relief. But the good news is that many people qualify—even if they think they earn too much. Understanding how the test works, what income and expenses count, and how timing affects your case can make all the difference.

🟩 Quick Answer: What Is the Bankruptcy Means Test?

The bankruptcy means test is a calculation used to determine whether you qualify for Chapter 7 bankruptcy. It compares your average income from the past six months to your state’s median income. If you’re over the limit, the court deducts allowed expenses to calculate disposable income. If your disposable income is low enough—typically under $250/month—you may still qualify. Social Security and VA disability benefits are excluded in these calculations.

👨‍⚖️ You Don’t “Take” the Means Test—It’s Applied to You

Unlike a test you opt into, the means test is automatically applied to anyone filing Chapter 7 who has primarily consumer debts (e.g., credit cards, car loans, medical bills). You can avoid the means test, if the majority of your debt is buisness debt or non-consumer debt. 

The goal: prevent people with the ability to repay debt from using Chapter 7 to eliminate it.

If your income is below your state’s median, you pass. If it’s above, you’ll go through a formula that subtracts allowable expenses to calculate your monthly disposable income.

If that number is low enough—typically under $250/month—you may still qualify.

📅 Step 1: Your Lookback Income — and Why Timing Matters

The means test uses your average gross income over the last six full calendar months before filing.

What counts as income:

• Wages, salary, tips, and overtime

• Bonuses and commissions

• Business or gig work income (before expenses)

• Rental income

• Support from household members

• Income from spouse in same household

What’s excluded:

• ✅ Social Security benefits

• ✅ VA disability payments

Timing can make or break your case. If you received a one-time bonus or had an unusually high-earning month, waiting for that month to drop out of the six-month average can dramatically improve your eligibility.

🧮 Step 2: Compare to Your State’s Median Income (Virginia 2025)

For cases filed after April 1, 2025, here are the Virginia median income thresholds:

If your annualized income is below this number, you pass the test.

If you’re over, you continue to Part 2, where you deduct allowed expenses. These income qualifications are adjusted twice a year.

💸 Step 3: Subtracting Allowed Expenses (Part 2 of the Means Test)

This section determines how much disposable income you have left after reasonable living expenses. If that number is too high, the court may presume abuse.

Allowable deductions include:

🔧 Car Loan Deduction Rule

If you’re keeping your car, you get to deduct the greater of:

• Your average car payment over 60 months, or

• The IRS standard, currently $662/month

➡️ Even a small car payment helps reduce your disposable income and improve your chances of qualifying.

Non-Filing Spouse Deduction

Even though your spouse isn’t filing, their income must still be disclosed because the bankruptcy court looks at the entire household’s finances, not just yours. The law assumes that people living together share resources and expenses, so the trustee needs to see both sides of the household budget. Once that full income is reported, the NFS deduction ensures the calculation is fair by removing any amounts that don’t benefit the filing spouse or household.

The non-filing spouse (NFS) deduction, also called the marital adjustment deduction, is a rule that allows you to subtract the portion of your spouse’s income that does not go toward household expenses when you file bankruptcy. For example, if your spouse pays child support, student loans, or other debts that only benefit them, those payments can be deducted so that only the income actually supporting the household is considered in your case. This adjustment prevents your spouse’s completely separate obligations from unfairly inflating your disposable income in the bankruptcy analysis.

❌ Expenses That Don’t Count

Some expenses you may actually pay are not allowed in the means test:

• ❌ Student loan payments

• ❌ Voluntary 401(k) or IRA contributions

• ❌ Charitable giving (unless historically consistent and documented)

• ❌ Credit card, payday, or personal loan payments

📌 These expenses may still factor into your actual Chapter 13 plan or budget (if there is a reason they are paid outside the plan)—but not the means test.

⏳ When to Delay Filing

Filing too soon can disqualify you from Chapter 7. You may want to wait if:

• You recently received a bonus, commission, or overtime

• You had seasonal income that inflated your average

• You just lost your job and want your lower income reflected

• You are about to incur deductible expenses (e.g., childcare, medical bills, tax payments)

An experienced attorney can help you strategically time your filing for the best outcome.

⚖️ Means Test Exceptions

You may be exempt from the means test entirely if your debts are primarily business-related.

Examples (of buisness debt):

• SBA loans

• Personal guarantees on business leases

• Back taxes

➡️ If more than 50% of your total debt is non-consumer (including mortgages and car loans), you can skip the means test.

🔹 You’re a disabled veteran

You’re exempt if:

• You incurred most debts during active duty or homeland defense, and

• You have a VA disability rating of 30% or higher

🔹 Joint filers with mixed debts

Each spouse is evaluated separately. One may qualify for the exemption even if the other doesn’t.

🏠 Passing the Means Test Doesn’t Mean Keeping Everything

Even if you pass, you must also pass the “asset test”—meaning your property must be fully protected under state exemptions, or the trustee may take it to repay creditors.

🔐 In Virginia, key exemptions include:

• $10,000 vehicle equity

• $5,000 wildcard/homestead exemption (+ more for seniors and disabled vets)

• Tenants by the Entirety protection for some jointly owned assets by married couples (with no joint unsecured debts)

💡 You may qualify for Chapter 7 but still choose Chapter 13 if you need to protect unexempt assets.

⚠️ Common Mistakes That Can Hurt Your Case

🔍 FAQs: Bankruptcy Means Test

Q: Can I pass the means test even if I make over $100,000/year?
A: Yes—especially with dependents, a mortgage, car loans, or priority tax debt.

Q: Does Social Security or VA disability count?
A: No. They are excluded from the means test income calculation.

Q: What if my income recently dropped?
A: Wait until the 6-month lookback reflects your new average. Timing matters.

Q: Can I deduct arrears on mortgage or tax debt?
A: Yes—as long as you’re keeping the property and it’s a priority debt.

Q: What if I’m self-employed with variable income?
A: You must average your gross income over the six months, minus business expenses.

Q: Do two attorneys always get the same result?
A: No. The means test involves interpretation. A skilled attorney can maximize your deductions and guide you through gray areas.

🧠 Why You Need a Bankruptcy Attorney—Especially for the Means Test

You can’t afford to get this wrong.

The means test is complex, and even one mistake can disqualify you or lead to an unwanted Chapter 13 repayment plan.

At Ashley F. Morgan Law, PC, we offer:

• ✅ Free consultations to see if bankruptcy makes sense

• ✅ Flat-fee or complex means test evaluations

• ✅ Expert guidance to time your filing, protect assets, and plan effectively

In many cases, we know the answer in our head. But in borderline or high-income cases, we run the full calculation and give you real advice—not empty promises.

📞 Ready to Learn Where You Stand?

We serve individuals and families across Northern Virginia and the D.C. area. Whether you’re ready to file or just exploring options, we’re here to help.

Schedule your free consultation today or call us at 703-880-4881.