What Is Current Monthly Income for the Means Test?

Current monthly income (CMI) is an important part of the bankruptcy means test. Find out what it is.

By , Attorney · University of the Pacific McGeorge School of Law

One way to eliminate debt in Chapter 7 is by demonstrating your "current monthly income" is low enough to pass the Chapter 7 means test. Understanding the following should help:

  • how to calculate your current monthly income
  • what to include in and exclude from your current monthly income
  • why you must convert your current monthly income into a yearly amount, and
  • where to find your state's median income amounts.

Even if your current monthly income exceeds qualification limits, you'll have a second chance to pass the Chapter 7 means test. Find out what to do if you fail the Chapter 7 means test.

How Is Current Monthly Income Calculated in Chapter 7 Bankruptcy?

The current monthly income is an average of all earnings and income you were entitled to receive during the full six months before filing. This period is known as the "look-back period." You'll add all income earned—even if not received—during the look-back period before dividing the total by six.

Example. Suppose you filed for Chapter 7 on January 19, 2023. The look-back period would be July 1, 2022, through December 31, 2022. If you received $24,000 in reportable income during that time, your current monthly income would be $4,000 ($24,000 divided by six).

What Do I Include When Calculating My Current Monthly Income?

The current monthly income calculation includes income from almost all sources. You must include the following in your calculations:

Gross wages, salaries, tips, bonuses, overtime, and commissions. Use your gross income, which is the amount before tax and other deductions are subtracted.

Net income from business, profession, or farm. If you are self-employed or own a business or farm, include your net income after deducting business expenses.

Net rental or other real property income. If you receive rent or other real property income, include the net profit—the amount remaining after deducting expenses.

Income from interest, dividends, and royalties. Interest, dividends, and royalty income are part of your current monthly income.

Pension and retirement income. If you have a pension or receive retirement benefits, add them to your calculation.

Regular contributions or support received from another person for household expenses. You'll include income and funds regularly received from someone not filing for bankruptcy. Examples include a partner, family member, or roommate. You'll also include child support.

Unemployment benefits. Include unemployment compensation as long as it isn't a benefit received under the Social Security Act.

Income from all other sources. Any income you receive from another source.

What Income Do I Exclude From My Current Monthly Income Calculation?

You won't include income received from the following sources:

Benefits or payments received under the Social Security Act. Don't include Social Security income or other benefits paid under the Social Security Act, such as Social Security disability payments.

Other payments. You don't need to include any United States Government payments related to a disability, combat-related injury or disability, or death of a uniformed services member.

How Do I Use Current Monthly Income to Qualify for Chapter 7 Bankruptcy?

The means test compares your current monthly income against your state's median income for a household of the same size. However, before comparing the two figures, you must convert your current monthly income to a yearly figure by multiplying it by 12.

After multiplying your current monthly income by twelve, your next step will be comparing whether your yearly income is below your state's median income for your family's size. If it is, you'll pass the means test and qualify for a Chapter 7 debt discharge.

Example. Emily's current monthly income is $3,000, and her yearly income is $36,000 ($3,000 multiplied by 12). Emily is single, and her state's median income for a single-person household is $40,000. She automatically passes the means test and qualifies for Chapter 7 bankruptcy.

Where Do I Find My State's Median Income Amounts?

Go to the U.S. Trustee Program website and select "Means Testing Information." Then choose the most recent option under "Data Required for Completing the 122A Forms and the 122C Forms" and choose "Median Family Income Based on State/Territory and Family Size." After finding your state, you'll compare your yearly income to the median income for your family's size.

What If I Make Too Much to Qualify for Chapter 7 Bankruptcy?

If your earnings are too high, you'll have another opportunity to pass the means test. The second portion of the test lets you deduct expenses from your income. You can use some actual monthly expenses, but federal and state standards limit others.

You'll pass the means test if the calculations show you don't have enough disposable income to pay a reasonable amount of your debts. Otherwise, you might be able to use Chapter 13 bankruptcy for financial relief.

What If My Current Monthly Income Doesn't Reflect My Actual Income?

In most cases, it won't because the calculation doesn't use your current income but rather what you earned in the past. If you don't qualify because the amount is too high and your current monthly income is lower, wait a few months. You'll likely qualify after a reasonably short time.

Consult With a Bankruptcy Lawyer

Contact a local bankruptcy lawyer if you find completing the Chapter 7 means test confusing or challenging. Many offer bankruptcy services at a relatively affordable price, and the first appointment is often free.

Navigating Your Bankruptcy Case

Bankruptcy is essentially a qualification process. The laws provide instructions for completing a 50- to 60-page bankruptcy petition, and because the rules apply to every case, you can't skip a step. We want to help.

Below is the bankruptcy form for this topic and other resources we think you'll enjoy. For more easy-to-understand articles, go to TheBankruptcySite.

More Bankruptcy Information

Bankruptcy Forms and Document Checklist

You'll find fillable, downloadable bankruptcy forms on the U.S. Courts bankruptcy form webpage.

Chapter 7 Statement of Your Current Monthly Income

Chapters 7 and 13 Bankruptcy Form List

Bankruptcy Document Checklist

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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.

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