Understand Chapter 7 Bankruptcy Income Limits By State For Qualification

Your income may play a major role in Chapter 7 bankruptcy qualification. The exact qualification can be complex given the following reasons:

  1. The means testing income data changes often every 6 months or so.
  2. The income is based on an average income for a look back period.
  3. There are 2 parts of the means test, so if your income is too high for the first part, that may not automatically disqualify you.

So, the income limits for Chapter 7 qualification is complicated. The goal of this article is to simply for the income limits for you and provide state articles that can provide further clarity.

How Chapter 7 Bankruptcy Works

Before we cover Chapter 7 bankruptcy limits, let’s spend a few minutes to address how Chapter 7 bankruptcy works.

Chapter 7 bankruptcy is often called liquidation bankruptcy. This is because, when you file for Chapter 7 bankruptcy, the court puts a bank trustee over all of your assets and may sell nonexempt assets to pay off your debt. 

Going through Chapter 7 bankruptcy is relatively quick, and the goal is to come out with significantly less debt than you started with. 

If you can no longer pay the minimums on the debt you have, you may start considering filing for bankruptcy. In order to pay off debt, you have to have disposable income. Disposable income is money you bring in that is not needed for a necessary living expense. Living expenses include your rent or mortgage payment, food, utilities, and other things that are necessary for day to day living. If your income exceeds this amount, then you are able to put that money towards your debt. However, if your income does not exceed your living expenses, then it is likely that you cannot continue paying off your debt.

How Does Income Limit Work for Chapter 7 Bankruptcy Qualification?

As mentioned earlier, Chapter 7 bankruptcy is one of the most common forms of bankruptcy in the US. Though it is common, there is an income limit you meet in order to file for Chapter 7 bankruptcy. We will also cover the other aspects of Chapter 7 qualification.

Read below to learn more about what qualifies you for Chapter 7 bankruptcy:


Your income from the past six months has to be less than the median income for the same-sized households in your state. If your income is higher than is the median income, there is still a chance you qualify. 

You will have to go through what is called a ‘means test.’ The means test looks to see if your disposable income is enough to make even partial payments to your creditors. If you do not make enough, then you may still qualify for Chapter 7 bankruptcy.

Other Petitions

In order to qualify for Chapter 7 bankruptcy, you cannot have filed for Chapter 7 bankruptcy in the previous eight years, or Chapter 13 bankruptcy in the previous six years.

Dismissed Cases: 

If you have recently had a bankruptcy case dismissed, you have to wait 181 days before refiling.

Credit Counseling

Before the court will consider your case, you must meet with a credit counselor. There are court approved credit counselors who will meet with you and lay out your financial situation from start to finish. They will see if there are ways you can take control of your finances without declaring bankruptcy. They also will help you understand what options are available to you. You must take this course within 180 days of filing.

Chapter 7 Bankruptcy Income Limits By State

The Chapter 7 bankruptcy limits change every 6 months, and it’s helpful to understand the information on the state level. See the following income limit guides by state below. You can also check the up to date means testing on the UST website.

Many of these guides will have the household size, income limit, and state information on this government website: Median Family Income Based on State/Territory and Family Size. At the time of this writing, the most recent income limits were for cases filed on or after May 15, 2021.

What Can Prevent Chapter 7 Qualification For Discharge?

These are the main qualifications you must meet in order to file for Chapter 7 bankruptcy. Even if you qualify, however, there are a few things that would cause the court to dismiss the case.


Just how an income limit can help you qualify, being above that income limit can mean that you may not qualify for Chapter 7 qualification.

If your income is too high above the median, you may not qualify for Chapter 7 bankruptcy. In some circumstances, you can still qualify using part 2 of the bankruptcy means test to qualify. That said, in some cases, if your income is too high, you may not qualify for Chapter 7 bankruptcy.

Committing Bankruptcy Fraud

If the court discovers that you hid some income from the court, or were not fully honest about your debt situation, your case can be dismissed. Not only might the court dismiss your case, but there are also other consequences you may face. These consequences could include fines and incarceration.

Not Completing the Education Courses

The main goal of going through the bankruptcy process is to allow you to rebuild your financial situation with a clean slate. In order to build a financially stable future, the court mandates financial education courses that will help you rebuild. If you refuse these classes, or frequently miss them, the court can and will dismiss your case.

Incorrect or Incomplete Filing

Make sure you fully fill out all the paperwork given to you when you begin filing for bankruptcy. If you leave something out, or fill something out incorrectly, there is a chance for dismissal when the court discovers the error. This includes making sure you pay your court fees as well. Working with a bankruptcy attorney will be helpful to ensure you are doing everything correct.

Pros and Cons of Chapter 7 Bankruptcy

The thought of bankruptcy can be overwhelming, especially when considering something like Chapter 7 bankruptcy. Despite this, the outcome is good and something worth working towards: a better financial future. While the outcome is good, the process can be difficult. Here are some pros and cons of filing for Chapter 7 bankruptcy:


  • Filing for Chapter 7 bankruptcy puts an automatic hold on debt collectors. This means that creditors can no longer demand that you continue making payments on the debt that you owe.
  • The time it takes to go through the entire Chapter 7 bankruptcy process is only about 6 months. Compared to other forms of bankruptcy, or just living with your debt, this is a relatively short amount of time.
  • Court filing fees, attorney fees, and more tend to add up over time. And when you’re filing for bankruptcy, this may seem like something you can’t keep up with. Chapter 7 bankruptcy tends to be one of the least expensive forms of bankruptcy.


  • Chapter 7 bankruptcy is often called liquidation bankruptcy for a reason. Once you file for Chapter 7, a bankruptcy trustee begins taking your nonexempt assets and liquidating them to begin paying off your debt. There are some protected items, but there is a chance you will lose a lot of your valuable possessions.
  • The damage that filing for bankruptcy does to your credit score is often drastic. Your credit score will decline, and your credit report will list your bankruptcy for years to come. This won’t be permanent, and you can work to rebuild your credit, but it will have an impact.
  • Typically, most debt is either paid off or forgiven while you are in Chapter 7 bankruptcy. Sometimes, however, there are certain debts that cannot be forgiven. Things like alimony, child support, and government debts are exempt from forgiveness, and you will still be responsible for them.

Chapter 7 Bankruptcy Alternatives

While it may seem like you have no other option than filing for bankruptcy, consider these next few alternatives to see if they may work for you:

  • Debt Consolidation: Consolidate your debt into one easy payment.
  • Debt Settlement: Work with your creditors to determine a lower price you can pay immediately to settle the debt that you owe.
  • Debt Management Plan: Have a credit counselor look over your financial situation to create a debt management plan that will help you pay down your debt while maintaining your way of life. 

In all, there is no one easy answer for every person. Each situation is unique, and you must tailor the solution to the situation. Make sure to read through your options and know what qualifications you meet to see what steps you may be able to take towards financial stability.


Understanding the Chapter 7 bankruptcy income limits is important to estimate your bankruptcy qualification. You can check the state guides to check your income limits, what prevents Chapter 7 qualification, pros and cons and bankruptcy alternatives.

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