When bills pile up faster than you can pay them, bankruptcy can offer a fresh start. But before wiping the slate clean through Chapter 7 bankruptcy, there’s one major hurdle most people need to clear: the means test.
This process helps the court decide whether your income qualifies you for a Chapter 7 discharge. At Hedtke Law Group, we guide our clients through every step of this process with care, attention, and flexible options tailored to their situation. It’s important that you understand what you’re getting into before you start the process. Choosing the right path forward is critical for your financial future.
What is the Means Test?
The means test determines whether someone with mostly consumer debt (like credit cards, personal loans, or medical bills) can file for Chapter 7 bankruptcy. It filters out those who earn too much to qualify based on a review of income, household size, and necessary living expenses.
This test only applies if your debt is primarily personal in nature. If the majority of your debt comes from operating a business or dealing with taxes, the test may not apply at all. There are also exemptions for certain military personnel and disabled veterans, depending on the circumstances.
The first step looks at your income over the past six months. If your average monthly income falls below California’s median for your household size, you can move forward with Chapter 7. If your income is higher, the second step allows for deductions based on regular living expenses to see what disposable income remains.
This is where many people get discouraged, but we want to help you understand there are other options and paths forward. Even if you don’t immediately qualify, you may still become eligible based on deductions or future changes in your financial situation.
A Look at the Chapter 7 Bankruptcy Means Test Numbers
To qualify for Chapter 7 bankruptcy in California, your household income must fall below specific thresholds set by the U.S. Department of Justice. These figures are updated periodically to reflect changes in the cost of living and economic conditions. As of April 1, 2025, the median income limits for California are as follows:
- 1-person household: $76,190
- 2-person household: $99,936
- 3-person household: $112,536
- 4-person household: $130,845
For households with more than four members, add $11,100 for each additional person.
These income thresholds serve as the initial benchmark in the means test. If your average monthly income over the six months preceding your bankruptcy filing is below the median for your household size, you typically qualify for Chapter 7. However, if your income exceeds these limits, you may still be eligible after accounting for allowable expenses, which can significantly reduce your disposable income.
Alternatives for Those Who Do Not Qualify for Chapter 7
If the court determines that you can afford to pay back some of your debts, you may be directed toward Chapter 13 bankruptcy instead. While Chapter 7 eliminates most debts quickly, Chapter 13 offers a payment plan over three to five years that can reduce what you owe and stop collections.
Chapter 13 may also help you catch up on missed mortgage or car payments and keep your property. This is a way to get structured debt relief if Chapter 7 isn’t an option. Depending on your goals, Chapter 13 may actually be the better long-term solution for protecting assets and getting back on solid financial ground.
Finding the Best Path Forward in Moreno Valley
Bankruptcy law isn’t one-size-fits-all, and your situation deserves a personalized approach. At Hedtke Law Group, we walk you through each step and make sure you understand every option. We offer flexible payment plans and even help clients rebuild their credit after bankruptcy. If you’re ready for real solutions, we’re ready to help.
