Chapter 13 Rules: No Means Test Required

If you plan to file for Chapter 13 bankruptcy, you won't need to take the "means test" used to determine Chapter 7 bankruptcy eligibility in the traditional sense. However, people filing for Chapter 13 go through a similar income means test to determine how long their Chapter 13 repayment plan will last and how much disposable income they pay creditors.

Also, filers must meet other Chapter 13 bankruptcy eligibility criteria. For instance, your debts can't exceed current limits, and you must be able to pay everything required by the Chapter 13 payment rules.

After learning about qualifying for Chapter 13 bankruptcy, check out the resources provided at the end of the article. You'll find links to applicable bankruptcy forms and additional articles we think you'll enjoy.

The Means Test for Chapter 7 Bankruptcy

The Chapter 7 bankruptcy means test determines if you have enough income to repay some of your debts through a Chapter 13 bankruptcy repayment plan. It's a two-part test. If your gross income doesn't exceed your state's median income for a similar family size, you pass and don't need to take the second part.

However, suppose your income is higher than your state's median income. In that case, you'll have another opportunity to pass the Chapter 7 means test. You'll deduct allowed expenses from your gross income. If you don't have enough remaining to pay creditors through a Chapter 13 plan, you'll qualify for Chapter 7.

If you fail the means test because you have more income than the law allows, your Chapter 7 filing is presumed abusive. You won't qualify for a Chapter 7 discharge unless you show otherwise.

The Role of Income, the Means Test, and Plan Length in Chapter 13

One reason income is important in Chapter 13 bankruptcy is that it determines the length of your repayment plan. If your income is less than your state's median income, your repayment plan will probably last three years. If your income exceeds your state's median income, your repayment plan will probably last five years.

But you'll need to meet another income requirement. Most potential Chapter 13 filers aren't concerned with income that is too high but whether they have enough income. If you can't fund a repayment plan, you won't be eligible for Chapter 13.

Other Chapter 13 Bankruptcy Filing Requirements

Here are a few Chapter 13 requirements you'll need to meet:

• Businesses can't file. Chapter 13 is available to individuals and sole proprietors. Businesses, companies, and corporations aren't eligible. Learn about bankruptcy for small businesses.
• Debts can't exceed Chapter 13 limits. Chapter 13 debt limits are $1,580,125 for secured debt and $526,700 for unsecured debt for cases filed between April 1, 2025, and March 31, 2028. (11 U.S.C. § 109(e) - current amounts are published in the Federal Register. You can also check for current debt limits on the U.S. Courts Chapter 13 Bankruptcy Basics webpage.) Secured debt is guaranteed by collateral, like your house or car. All other debts, such as credit card balances, medical bills, and back rent, are unsecured. If a debt is unsecured, the lender can't recover property if you don't pay as agreed.
• Filers must propose a "confirmable" plan. Your repayment plan must pay off all required debts (and you must earn enough to implement the plan). Otherwise, the bankruptcy court won't "confirm" or approve your plan at the Chapter 13 confirmation hearing.

Learn how to calculate a Chapter 13 monthly payment.

Navigating Your Bankruptcy Case

We wholeheartedly encourage research and learning, but online articles can't address all bankruptcy issues or the facts of your case. The best way to protect your assets in bankruptcy is by hiring a local bankruptcy lawyer.