The Bankruptcy Means Test in California

What Is the Means Test?

The means test determines whether you qualify for Chapter 7 bankruptcy or must file Chapter 13. It was introduced by the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005.

Step 1: Compare Income to Median

Calculate your "current monthly income" (average income over the last 6 months). Compare it to the California median income for your household size. If you're below the median, you pass the means test and qualify for Chapter 7.

Step 2: Deductions (If Above Median)

If your income is above the median, you subtract allowed expenses (IRS standards plus actual expenses for things like mortgage, childcare, medical). If the remaining "disposable income" is below certain thresholds, you may still qualify for Chapter 7.

California Median Income

Median income figures are updated periodically. As of 2024, approximate annual medians are: 1-person household ~$65,000, 2-person ~$85,000, 4-person ~$110,000. Check official sources for current figures.