The Chapter 7 means test is designed to determine whether an individual qualifies for a liquidation bankruptcy based on their income and financial situation. If your income is above a certain threshold and your disposable income appears sufficient to repay some debts, you may not pass this test.
If you are hoping to file for bankruptcy, failing the means test does not mean you are out of options. It simply alters the ways in which your case is authorized to proceed.
Alternative pathways forward
If you were hoping to pass the means test but failed it due to your income level, one possible outcome is that any Chapter 7 case that you’ve already filed could be challenged or dismissed. If the court or the U.S. Trustee determines that allowing you to proceed under Chapter 7 would be an abuse of the system, they may file a motion to dismiss any active case you’ve already filed. If that motion is granted, your debts will not be discharged under Chapter 7, and you will need to consider alternative solutions.
Alternatively, you may be able to convert your case to Chapter 13. This is a common path for individuals who do not qualify for Chapter 7. Chapter 13 involves creating a repayment plan, typically lasting three to five years, wherein you pay back a portion of your debts based on your income and expenses. While this requires ongoing payments, it can provide protection from creditors and a structured way to address outstanding obligations.
Another possibility is that your legal representative may be able to identify adjustments or allowable expenses that were not fully considered during your initial means test calculation. In some cases, correcting or refining the information can change the outcome and allow you to qualify for Chapter 7 after all.
It is also important to remember that the means test is only one part of the analysis that the court will use when evaluating any case that you may have filed or hope to file. Courts may consider the totality of a filer’s financial situation, including special circumstances such as medical expenses or recent job loss, which could justify Chapter 7 relief even if initial numbers suggest otherwise.
Failing the means test can feel discouraging, but it does not mean bankruptcy relief is unavailable. Speaking with an experienced legal team can help you understand your options, evaluate whether Chapter 13 is appropriate and determine the best path forward based on your financial goals.