Chapter 7 Income Limits and Eligibility

Chapter 7 has an income limit, but it is not one national number. The limit is your state's median income for your household size, and if you earn less than that, you pass the income part of the means test automatically. Earn more and you are not disqualified. You move to a second calculation that looks at what you have left after allowed expenses.

Chapter 7 Income Limits by State

The cutoff that matters is the median income published for your state and household size. These figures come from Census data and are used nationwide to apply the means test under 11 U.S.C. § 707(b). Because they track local incomes, the limit in a high-cost state can run tens of thousands of dollars above a lower-cost one for the same size household.

Here is how the current figures compare for the smallest and a mid-size household:

Larger households get more room. Once you pass four people, the limit rises by a fixed amount for each additional member.

These numbers are updated periodically, and every state and territory has its own set. For your exact figure, check your state's page or run the am I eligible for a Chapter 7 bankruptcy quiz.

How the Median Income Comparison Works

The income the test uses is not last month's paycheck. It is your current monthly income, which is the average of everything you received over the six full calendar months before you file, multiplied by twelve. That average captures overtime, bonuses, and side income, so a single big month does not sink you and a recent job loss may not help until enough time has passed.

Two details trip people up. First, household size sets which column you compare against, and a larger household means a higher limit. Second, the figure is the median for your state, not the national average, so where you live changes the answer. A $75,000 income clears the one-person limit in Massachusetts but sits above it in Texas.

If your annualized income lands below your state's median, you pass this step and skip the expense math entirely. The full calculation, including how to add up your six-month average and count your household, is covered on our bankruptcy Chapter 7 means test guide.

What If Your Income Is Above the Limit

Being over the median is not a wall. It moves you to the second part of the means test, which subtracts a set of allowed living expenses from your income to find your disposable income. The allowances cover categories like food, apparel, housekeeping supplies, personal care, and out-of-pocket healthcare, using national and local standards rather than your actual spending. For a one-person household, for example, the national food allowance is $497 a month and out-of-pocket healthcare for someone under 65 is $84 a month.

After those and other deductions, if what remains is low enough, you still qualify for Chapter 7 even though you earn above the median. If it is high enough, the law presumes filing would be an abuse of Chapter 7, and you would generally look at a repayment plan instead. The full list of allowed expenses and the thresholds is detailed on the means test page.

Other Chapter 7 Eligibility Rules

Income is the headline requirement, but 11 U.S.C. § 109 sets a few others that apply no matter what you earn:

• Credit counseling. You must complete an approved credit counseling course in the 180 days before you file. It is a short session and can usually be done online or by phone.
• Prior discharges. If you already received a Chapter 7 discharge, you cannot get another one in a Chapter 7 case filed within eight years of the earlier filing date, under 11 U.S.C. § 727(a)(8).
• No recent dismissal for cause. A case dismissed in the prior 180 days for certain reasons, such as ignoring a court order, can block a new filing for a time.
• Honest and complete filings. You have to disclose your income, assets, debts, and recent financial transactions truthfully. Hiding assets or giving false information can cost you the discharge.

None of these depend on income. Someone well under the median can still be ineligible for filing too soon after a prior case, and someone over the median can clear all of these without trouble.

Do You Qualify? Next Steps

Work through it in order. Find your state's median for your household size and compare your six-month average income. Under the median, you pass on income and move on to the other rules above. Over it, run the full expense calculation before you conclude anything.

The fastest way to get a read is the am I eligible for a Chapter 7 bankruptcy quiz, which walks through the same questions a screening would. If Chapter 7 looks out of reach, that usually points toward a repayment plan. Our guide on Chapter 13 vs Chapter 7 bankruptcy lays out how the two compare, and if you are still deciding whether to file at all, Chapter 13 bankruptcy versus Chapter 7 and your other options is the place to start.