February 17, 2022 Last updated February 18th, 2022 1,554 Reads share

Which Income Does The Bankruptcy Means Test: Net or Gross Income?

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The bankruptcy means test uses gross income. Gross income is before taxes are removed.

Filing for bankruptcy can be an intimidating thing. Many think that filing for bankruptcy is the worst thing you could ever do financially. However, bankruptcy was designed as a system that could help take individuals from drowning in debt to a place of financial security. If you feel like you may be drowning in debt, bankruptcy may be a valid option for you! However, there are some requirements in place that prevents people and businesses from abusing this system. One such requirement is the means test. 

To perform a means test, your gross monthly income will be calculated on your last six months’ salary before filing for bankruptcy. For more information on this, check the official government bankruptcy means test forms with the title Chapter 7 statement of your current monthly income. 

1. How to calculate average income for the bankruptcy means test 

Without proper guidance, the process of calculating average monthly income can be a difficult one. The major point of confusion is, “which month should I use to calculate my average income”? How do I calculate my average income? As such, we created a tool that most bankruptcy attorneys will recommend that you use. It estimates your average monthly income for a six-month period. 

The second step is to calculate your average income, and a Chapter 7 means test calculator can help to check if you’ll qualify to get a Chapter 7 bankruptcy discharge. The calculator below will take your household size and state into consideration. It also takes into consideration the means-testing data for cases filed after or on May 15, 2021.  

2. Where will I use my average income to test if I qualify for bankruptcy? 

After calculating your average income for the past six months, you can now check if you qualify by plugging the number in the bankruptcy means test we built below. If the number is below the median in your state, then you will qualify for a bankruptcy discharge. If it’s above the median for your state, then move to step 3. 

It’s important to keep in mind that the means test can vary from state to state. This means that the California bankruptcy means test may look slightly different than the Illinois bankruptcy means test. Make sure you are aware of what the means test requires in your state to see if you will be eligible to file for Chapter 7 bankruptcy.

3. If the result on the calculator shows “may or may not qualify” for a Chapter 7 bankruptcy discharge

If your income is a bit higher than the median income by not more than $20,000, then the chances are still there to qualify for a Chapter 7 discharge. In such an instance, you can fill these two forms to still qualify. 

  1. Statement of exemption from the presumption of abuse under 707(b)(2)
  2. Chapter 7 Means Test Calculation

Luckily, the calculations there are easy to do since they are form-based. You can access our Chapter  7, median calculator below. 

4. What happens if the result on the Above Median Calculator is “may not qualify”?

If the median calculator shows “may not qualify,” you should research other options to bankruptcy that can help you reach your goal. You should also speak with your bankruptcy attorney, as certain laws are peculiar to each state, one of those laws may qualify you for bankruptcy. As stated above, the bankruptcy means test income data is often different by state (So, the Ohio bankruptcy means test may be different from the bankruptcy means test in Arizona).

On an additional note, when filing bankruptcy is good to understand that there are certain rules that are dependent on the state you are filing in. For instance, filing bankruptcy in New Mexico, filing bankruptcy in Delaware, filing bankruptcy in Rhode Island, or filing bankruptcy in New Hampshire will all have separate but somewhat similar rulings. 

5. What Happens If I Don’t Qualify Based on The Bankruptcy Means Test?

If you don’t qualify for Chapter 7 bankruptcy, many people research and compare Chapter 13 bankruptcy vs Debt Negotiation vs Debt Management. Each of these options has its own set of costs and pros and cons, so it’s important to research these options strategically. For example, if you face a debt collection lawsuit, then debt negotiation may be less helpful if the debt negotiation firm doesn’t handle debt-collection lawsuits. 


Bankruptcy may sound like a daunting option when facing financial hardship. The purpose of this article is to explain how gross income is used for the bankruptcy means test and explain how income works in general for the means test. While gross income is used for the bankruptcy means test, individuals may still qualify for Chapter 7 bankruptcy if she/he can use the actual expenses. 

If you are unable to qualify for Chapter 7 bankruptcy, you may consider alternatives.

Dave Te

Dave Te

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