{"id":1927,"date":"2009-09-07T21:54:00","date_gmt":"2009-09-07T21:54:00","guid":{"rendered":"http:\/\/www.covstravels.com\/what-is-the-means-test\/"},"modified":"2026-06-08T22:59:04","modified_gmt":"2026-06-09T02:59:04","slug":"what-is-the-means-test","status":"publish","type":"post","link":"https:\/\/www.duncanlawonline.com\/staging\/8350\/what-is-the-means-test\/","title":{"rendered":"What is the Means Test in Bankruptcy?"},"content":{"rendered":"<figure class=\"wp-block-image size-full\"><img decoding=\"async\" loading=\"lazy\" src=\"https:\/\/www.duncanlawonline.com\/wp-content\/uploads\/2026\/06\/couple-on-couch-researching-bankruptcy-options-laptop.webp\" alt=\"couple-on-couch-researching-bankruptcy-options-laptop\" \/><\/figure>\n<p>If you are thinking about bankruptcy, you have probably heard about something called the &quot;means test.&quot; The name sounds scary. It makes a lot of people worry they won&#39;t qualify for help. But the means test is not as confusing as it sounds.<\/p>\n<p>This article explains what the means test is, how it works, and what it means for you in North Carolina. By the end, you should feel a lot more confident about where you stand.<\/p>\n<h2>The Short Answer<\/h2>\n<p>The means test is a formula that decides whether you can file <a href=\"https:\/\/www.duncanlawonline.com\/chapter-7-bankruptcy\/\">Chapter 7 bankruptcy<\/a> or whether you need to file <a href=\"https:\/\/www.duncanlawonline.com\/chapter-13-bankruptcy\/\">Chapter 13 bankruptcy<\/a> instead.<\/p>\n<p>It looks at your income and your expenses. If your income is low enough, you pass, and Chapter 7 is usually an option. If your income is higher, the test looks closer at your budget to see how much you could pay back.<\/p>\n<p>Many people pass the means test, even people with good jobs. The test gives credit for normal living costs like housing, food, and car payments. So don&#39;t assume you make &quot;too much&quot; to file.<\/p>\n<h2>Why the Means Test Exists<\/h2>\n<p>Congress created the means test in 2005. It came from a law called the Bankruptcy Abuse Prevention and Consumer Protection Act, often shortened to BAPCPA.<\/p>\n<p>The goal was simple. Lawmakers wanted to make sure that people who could afford to pay back some of their debt did so through a Chapter 13 repayment plan. People who truly cannot afford to pay can still use Chapter 7 to wipe out most of their debt.<\/p>\n<p>In other words, the means test is a gate. It points you toward the chapter that fits your situation.<\/p>\n<h2>How the Means Test Works<\/h2>\n<p>The means test is not one single step. It works in stages. Let&#39;s walk through them in plain English.<\/p>\n<h3>Step One: Compare Your Income to North Carolina&#39;s Median<\/h3>\n<p>The first step looks at your &quot;current monthly income.&quot; This is your average household income over the six full months before the month you file.<\/p>\n<p>Income includes almost everything:<\/p>\n<ul>\n<li>Wages and salary<\/li>\n<li>Self-employment income<\/li>\n<li>Rental income<\/li>\n<li>Pension and retirement income<\/li>\n<li>Investment income<\/li>\n<li>Regular help from family members or others in the home<\/li>\n<\/ul>\n<p>Social Security benefits are an important exception. The law leaves Social Security income out of this calculation.<\/p>\n<p>Once you add up your income, you compare it to the median income for a household your size in North Carolina. The median is simply the middle point. These numbers change over time, so always check the current figures on the U.S. Courts website at uscourts.gov.<\/p>\n<p>If your income is <strong>below<\/strong> the North Carolina median, you pass. You do not have to go any further, and Chapter 7 is usually available.<\/p>\n<p>If your income is <strong>above<\/strong> the median, you move to the next step. Being above the median does not mean you fail. It just means the test keeps looking.<\/p>\n<h3>Step Two: Subtract Your Allowed Expenses<\/h3>\n<p>In the second step, the test subtracts your allowed expenses from your income. What is left over is called your &quot;disposable income.&quot;<\/p>\n<p>Some expenses are based on your actual bills, like your mortgage or car payment. Others are based on standard amounts set by the IRS. These cover things like food, clothing, and utilities.<\/p>\n<p>The IRS standards change every year. You can review the current numbers at irs.gov. In many cases, these standards are fair and even work in your favor.<\/p>\n<p>If your disposable income is low enough, you pass the means test and qualify for Chapter 7. If it is high, the law presumes you should file Chapter 13 instead. If you land in the middle, there is one more step.<\/p>\n<h3>Step Three: Compare Disposable Income to Your Debt<\/h3>\n<p>The final step looks at how much of your unsecured debt you could pay back over five years. Unsecured debt includes credit cards, medical bills, personal loans, and similar debts.<\/p>\n<p>If your leftover income over five years would let you pay back a meaningful share of that debt, you may need to file Chapter 13. If it would not, you usually qualify for Chapter 7.<\/p>\n<h2>How Household Size Affects the Means Test<\/h2>\n<p>Household size matters a lot. A bigger household usually means a higher median income limit, which makes it easier to pass.<\/p>\n<p>Courts in North Carolina often use what is called the &quot;economic unit&quot; approach. This counts the people who share in or depend on your household finances. That can include relatives living with you who help pay bills or who rely on your support.<\/p>\n<p>This matters when your income is close to the median. Counting the right number of people in your home can move you from above the median to below it. That single change can shift you from a five-year plan to a shorter case.<\/p>\n<h2>How This Works in North Carolina<\/h2>\n<p>North Carolina has its own rules that work alongside the means test.<\/p>\n<p>First, North Carolina is an &quot;opt-out&quot; state. That means you must use North Carolina&#39;s exemptions, not the federal ones. Exemptions are the laws that protect your property, like your home equity, your car, and your household goods.<\/p>\n<p>Second, the median income figures and IRS standards used in the test are tied to North Carolina data. So the numbers a neighbor in another state uses may not match yours.<\/p>\n<p>If you are facing a <a href=\"https:\/\/www.duncanlawonline.com\/stop-wage-garnishment\/\">debt lawsuit, wage garnishment<\/a>, or <a href=\"https:\/\/www.duncanlawonline.com\/stop-foreclosure\/\">foreclosure<\/a>, the means test is only one piece of your plan. A local attorney can look at the whole picture.<\/p>\n<h2>Chapter 7 vs. Chapter 13 and the Means Test<\/h2>\n<p>The means test points you toward one chapter or the other. Here is a simple comparison.<\/p>\n<table>\n<thead>\n<tr>\n<th>Issue<\/th>\n<th>Chapter 7<\/th>\n<th>Chapter 13<\/th>\n<\/tr>\n<\/thead>\n<tbody>\n<tr>\n<td>Who it fits<\/td>\n<td>Lower income, or limited ability to repay<\/td>\n<td>Higher income, or a need to catch up on a house or car<\/td>\n<\/tr>\n<tr>\n<td>What happens<\/td>\n<td>Most unsecured debt is wiped out<\/td>\n<td>You repay part of your debt over three to five years<\/td>\n<\/tr>\n<tr>\n<td>Means test role<\/td>\n<td>You must pass to qualify<\/td>\n<td>You can file even if you don&#39;t pass Chapter 7<\/td>\n<\/tr>\n<tr>\n<td>Typical length<\/td>\n<td>About four to six months<\/td>\n<td>Three to five years<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p>Even if you pass the means test, Chapter 7 is not always the best choice. Some people choose Chapter 13 to save a home from foreclosure or to deal with certain debts. You can learn more about the differences on our <a href=\"https:\/\/www.duncanlawonline.com\/chapter-7-vs-chapter-13\/\">Chapter 7 vs. Chapter 13<\/a> page.<\/p>\n<p>One more thing to know about Chapter 13. Passing the math is not the whole story. A judge must also find that your plan is fair and proposed in good faith. For example, keeping luxury cars while paying very little to creditors can cause a judge to reject a plan, even if the numbers technically work.<\/p>\n<h2>What Should You Do Next?<\/h2>\n<p>The means test can feel overwhelming, but you don&#39;t have to solve it on your own. Here are some calm steps you can take.<\/p>\n<ol>\n<li><strong>Gather your income records.<\/strong> Find your pay stubs and other income for the last six months.<\/li>\n<li><strong>List your monthly bills.<\/strong> Write down your housing, car, insurance, medical, and childcare costs.<\/li>\n<li><strong>Count your household.<\/strong> Include the people who share in or depend on your household finances.<\/li>\n<li><strong>Be careful with online calculators.<\/strong> Free online means test tools often miss important details. They can give you the wrong answer.<\/li>\n<li><strong>Talk to a bankruptcy attorney.<\/strong> A lawyer can run the test correctly and explain your real options.<\/li>\n<\/ol>\n<p>Not sure whether bankruptcy is even right for you? Our guide on whether you <a href=\"https:\/\/www.duncanlawonline.com\/do-i-need-bankruptcy\/\">need bankruptcy<\/a> can help you think it through.<\/p>\n<h2>We Are Here to Help<\/h2>\n<p>If you are worried about the means test or unsure which chapter fits your life, you do not have to figure it out alone. Duncan Law can review your income, your budget, and your goals, and explain whether Chapter 7 or Chapter 13 makes more sense for you.<\/p>\n<p>We serve clients in Greensboro, Charlotte, Winston-Salem, Asheville, High Point, Salisbury, and communities throughout North Carolina. You can <a href=\"https:\/\/www.duncanlawonline.com\/book-with-damon\/\">book a free consultation<\/a> online or call the office nearest you:<\/p>\n<ul>\n<li>Greensboro: (336) 856-1234<\/li>\n<li>Charlotte: (704) 563-1224<\/li>\n<li>Winston-Salem: (336) 245-4294<\/li>\n<li>Asheville: (828) 348-5252<\/li>\n<li>High Point: (336) 294-5800<\/li>\n<li>Salisbury: (704) 297-4000<\/li>\n<\/ul>\n<p>For more answers, visit our <a href=\"https:\/\/www.duncanlawonline.com\/bankruptcy-faq\/\">Bankruptcy FAQ<\/a> page or <a href=\"https:\/\/www.duncanlawonline.com\/contact-us\/\">contact us<\/a> today.<\/p>\n<h2>Frequently Asked Questions<\/h2>\n<h3>What is the means test in simple terms?<\/h3>\n<p>It is a formula that decides whether you can file Chapter 7 bankruptcy or whether you should file Chapter 13. It compares your income and expenses to set standards.<\/p>\n<h3>Does failing the means test mean I can&#39;t file bankruptcy?<\/h3>\n<p>No. If you don&#39;t pass for Chapter 7, you can usually still file Chapter 13. Chapter 13 lets you repay part of your debt over three to five years.<\/p>\n<h3>What income counts on the means test?<\/h3>\n<p>Almost all income counts, including wages, self-employment, rental income, pensions, and regular support from others. Social Security benefits are a key exception and are left out.<\/p>\n<h3>Is Social Security counted in the means test?<\/h3>\n<p>No. Social Security income is excluded from the means test calculation. It may still be reviewed to confirm you can afford a Chapter 13 plan.<\/p>\n<h3>How far back does the means test look at my income?<\/h3>\n<p>It looks at the six full calendar months before the month you file. The test uses your average income during that time.<\/p>\n<h3>Do my actual expenses count, or does the IRS decide?<\/h3>\n<p>It is a mix. Some costs use your real bills, like your mortgage or car payment. Others use IRS standard amounts. These standards change yearly, so check current figures at irs.gov.<\/p>\n<h3>Can I pass the means test if I have a good job?<\/h3>\n<p>Yes, many people with good jobs still pass. The test gives credit for housing, transportation, taxes, childcare, and other normal living costs.<\/p>\n<h3>Does household size change my result?<\/h3>\n<p>Yes. A larger household usually means a higher income limit, which makes it easier to pass. North Carolina courts often count people who share in or depend on your household finances.<\/p>\n<h3>Are online means test calculators accurate?<\/h3>\n<p>Be careful with them. Free online tools often miss important details and can give the wrong answer. An attorney can run the test correctly for your situation.<\/p>\n<h3>If I pass the means test, is Chapter 7 always best?<\/h3>\n<p>Not always. Some people choose Chapter 13 to save a home, catch up on a car, or handle certain debts. The right choice depends on your goals, not just the math.<\/p>\n<p><script type=\"application\/ld+json\">\n{\n  \"@context\": \"https:\/\/schema.org\",\n  \"@type\": \"FAQPage\",\n  \"mainEntity\": [\n    {\n      \"@type\": \"Question\",\n      \"name\": \"What is the means test in simple terms?\",\n      \"acceptedAnswer\": {\n        \"@type\": \"Answer\",\n        \"text\": \"It is a formula that decides whether you can file Chapter 7 bankruptcy or whether you should file Chapter 13. 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North Carolina courts often count people who share in or depend on your household finances.\"\n      }\n    },\n    {\n      \"@type\": \"Question\",\n      \"name\": \"Are online means test calculators accurate?\",\n      \"acceptedAnswer\": {\n        \"@type\": \"Answer\",\n        \"text\": \"Be careful with them. Free online tools often miss important details and can give the wrong answer. An attorney can run the test correctly for your situation.\"\n      }\n    },\n    {\n      \"@type\": \"Question\",\n      \"name\": \"If I pass the means test, is Chapter 7 always best?\",\n      \"acceptedAnswer\": {\n        \"@type\": \"Answer\",\n        \"text\": \"Not always. Some people choose Chapter 13 to save a home, catch up on a car, or handle certain debts. The right choice depends on your goals, not just the math.\"\n      }\n    }\n  ]\n}\n<\/script><\/p>\n","protected":false},"excerpt":{"rendered":"<p>With major changes in the bankruptcy laws in 2005, you are required to undergo a \u201cmeans test.\u201d  Simply put, your household\u2019s income for the six months prior to filing bankruptcy (your income, your spouse\u2019s income and any contribution to your household from others) is annualized and compared to the Census Bureau\u2019s median income for the same size household within your state.<\/p>\n","protected":false},"author":3,"featured_media":14354,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"nf_dc_page":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[4171,4165],"tags":[],"class_list":["post-1927","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-bankruptcy-basics","category-chapter-7-bankruptcy"],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v27.7 (Yoast SEO v27.7) - https:\/\/yoast.com\/product\/yoast-seo-premium-wordpress\/ -->\n<title>What Is the Means Test in Bankruptcy? NC Guide<\/title>\n<meta name=\"description\" content=\"Wondering if you qualify for Chapter 7? Learn how the means test works in North Carolina and what it means for you. Book a free consultation today.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.duncanlawonline.com\/what-is-the-means-test\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"What is the Means Test in Bankruptcy?\" \/>\n<meta property=\"og:description\" content=\"With major changes in the bankruptcy laws in 2005, you are required to undergo a \u201cmeans test.\u201d Simply put, your household\u2019s income for the six months prior to filing bankruptcy (your income, your spouse\u2019s income and any contribution to your household from others) is annualized and compared to the Census Bureau\u2019s median income for the same size household within your state.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.duncanlawonline.com\/what-is-the-means-test\/\" \/>\n<meta property=\"og:site_name\" content=\"Duncan Law\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/duncanlawonline\" \/>\n<meta property=\"article:published_time\" content=\"2009-09-07T21:54:00+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2026-06-09T02:59:04+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/www.duncanlawonline.com\/wp-content\/uploads\/2026\/06\/couple-on-couch-researching-bankruptcy-options-laptop.webp\" \/>\n\t<meta property=\"og:image:width\" content=\"1942\" \/>\n\t<meta property=\"og:image:height\" content=\"809\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/webp\" \/>\n<meta name=\"author\" content=\"Damon Duncan\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:creator\" content=\"@DuncanLaw\" \/>\n<meta name=\"twitter:site\" content=\"@DuncanLaw\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Damon Duncan\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"4 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\\\/\\\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\\\/\\\/www.duncanlawonline.com\\\/what-is-the-means-test\\\/#article\",\"isPartOf\":{\"@id\":\"https:\\\/\\\/www.duncanlawonline.com\\\/what-is-the-means-test\\\/\"},\"author\":{\"name\":\"Damon Duncan\",\"@id\":\"https:\\\/\\\/www.duncanlawonline.com\\\/#\\\/schema\\\/person\\\/f7b4948225deab021c8ba0edbea00655\"},\"headline\":\"What is the Means Test in Bankruptcy?\",\"datePublished\":\"2009-09-07T21:54:00+00:00\",\"dateModified\":\"2026-06-09T02:59:04+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\\\/\\\/www.duncanlawonline.com\\\/what-is-the-means-test\\\/\"},\"wordCount\":1723,\"publisher\":{\"@id\":\"https:\\\/\\\/www.duncanlawonline.com\\\/#organization\"},\"image\":{\"@id\":\"https:\\\/\\\/www.duncanlawonline.com\\\/what-is-the-means-test\\\/#primaryimage\"},\"thumbnailUrl\":\"https:\\\/\\\/www.duncanlawonline.com\\\/staging\\\/8350\\\/wp-content\\\/uploads\\\/2026\\\/06\\\/couple-on-couch-researching-bankruptcy-options-laptop.webp\",\"articleSection\":[\"Bankruptcy Basics\",\"Chapter 7 Bankruptcy\"],\"inLanguage\":\"en-US\"},{\"@type\":\"WebPage\",\"@id\":\"https:\\\/\\\/www.duncanlawonline.com\\\/what-is-the-means-test\\\/\",\"url\":\"https:\\\/\\\/www.duncanlawonline.com\\\/what-is-the-means-test\\\/\",\"name\":\"What Is the Means Test in Bankruptcy? 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