“Too much income” only becomes a problem in Chapter 7 bankruptcy, where your income must be low enough to qualify. If it’s too high, you may be disqualified under the means test and have to file under Chapter 13 instead, where you pay back some of your debt over time.
Here’s how it works:
🔹 The Chapter 7 Means Test: How Income Affects Eligibility
The means test compares your gross household income to the median income for a household of your size in your state. If your income is below the median, you automatically qualify for Chapter 7.
If it’s above, the court will look at your expenses and disposable income to see if you could repay some of your debts instead.
📊 2024–2025 Median Income Guidelines (Approx.)
Here are examples of median annual incomes by household size (national average — varies by state):
| Household Size | Median Income (U.S. average) |
|---|---|
| 1 person | ~$60,000 |
| 2 people | ~$78,000 |
| 3 people | ~$92,000 |
| 4 people | ~$110,000 |
| Add per person | + ~$9,000 |
If your income is higher, you move to Part 2 of the means test.
🔍 Part 2: Can You Afford to Repay?
Even if you’re above the median, you might still qualify if your allowable expenses (like rent, car payments, food, health insurance, etc.) eat up most of your income. You’ll fill out a detailed budget to show the court that you don’t have enough disposable income left to make meaningful debt payments.
If the court decides you can afford to pay a portion of your debts, your Chapter 7 case could be converted to Chapter 13 or dismissed.
🚫 What Income Is Counted?
-
Wages, salary, bonuses, commissions
-
Business or self-employment income
-
Rental income
-
Pension or retirement income
-
Unemployment
-
Dividends, interest, royalties
-
Support payments received (e.g. alimony, child support)
🔸 Social Security income is usually not counted in the means test—though it must still be disclosed.
🧠 Bottom Line
You have “too much income” for Chapter 7 if:
-
You’re above the state median, and
-
After subtracting allowed expenses, you still have significant disposable income.
In that case, you may still qualify for Chapter 13, where you repay what you can afford over 3–5 years.
Want me to calculate whether your income qualifies under the means test based on your state and household size? Just tell me those details, and I’ll check for you.
Go to my website 🙂
Find me