The bankruptcy means test determines whether someone's income is low enough to qualify for Chapter 7 liquidation, or whether they'll be required to file Chapter 13 instead — one of the first and most consequential calculations in a bankruptcy case.
Comparing income to the state median
The first step compares your average income over the prior six months to your state's median income for a household of your size. If you're below the median, you generally pass the means test automatically and can proceed with Chapter 7.
If you're above the median, it gets more detailed
Above-median filers move to a more complex calculation involving allowed expenses and disposable income, determining whether there's enough left over to fund a Chapter 13 repayment plan. This step involves specific IRS expense standards, not just your actual spending.
Getting the calculation wrong has real consequences
An inaccurate means test calculation can result in a Chapter 7 case being dismissed or converted to Chapter 13 after it's already been filed — an outcome that costs time and, often, additional filing fees to correct.
Timing your filing can matter
Because the test looks at the prior six months of income, the timing of a filing — relative to a recent job loss, bonus, or temporary income spike — can affect the result. Understanding this before filing helps avoid an outcome driven by unfortunate timing rather than your actual financial situation.