How to Pass the Chapter 7 Means Test in Georgia

If you’re considering Chapter 7 bankruptcy in Georgia, the first hurdle you’ll face is the means test. Many people assume they won’t qualify because they have a job or earn a decent income — but that assumption is often wrong. The means test has two steps, and a large number of people who fail the first step still pass the second.

This guide breaks down exactly how the Chapter 7 means test works in Georgia, what the income limits are, and what options you have if you don’t qualify.

What Is the Chapter 7 Means Test?

The means test was introduced by Congress in 2005 to prevent higher-income debtors from wiping out debt through Chapter 7 when they could realistically repay some of it through Chapter 13 bankruptcy. It’s a two-part income and expense calculation completed on Official Bankruptcy Form 122A.

Passing the means test is a threshold requirement for Chapter 7 — it doesn’t guarantee approval, but failing it generally means Chapter 7 isn’t available to you.

Step 1: Calculate Your Current Monthly Income (CMI)

“Current monthly income” under the bankruptcy code does not mean what you earned last month. It means your average monthly gross income over the six full calendar months before your filing date, multiplied by 12 to get an annualized figure.

A few important rules:

• Include all income sources: wages, self-employment, rental income, interest, regular contributions from others, and most other receipts
• Exclude Social Security income: this is explicitly excluded by statute, which significantly helps retirees and disabled individuals
• Use gross income, not net: taxes and deductions don’t reduce your CMI at this stage

If your annualized CMI falls at or below Georgia’s median income for your household size, you automatically pass and can proceed with Chapter 7. No further analysis is needed.

Step 2: Compare to Georgia’s Median Income

The U.S. Trustee Program publishes updated median income figures for each state. Georgia’s current median income figures (verify current amounts at justice.gov before filing, as they update periodically) are approximately:

If your annualized CMI is below the threshold for your household size, you’re done — you pass. Most Chapter 7 filers in Georgia qualify at this step.

If you’re above the median, move to Step 2.

Step 3: The Full Means Test — Allowed Deductions

Exceeding Georgia’s median income does not automatically disqualify you from Chapter 7. You must complete the second part of the means test, which subtracts a series of allowed monthly expenses from your CMI to determine your monthly disposable income.

These expenses are not based on what you actually spend — they’re based on a combination of IRS standards and some actual expenses.

IRS National Standards

These cover everyday living expenses: food, clothing, personal care products, and miscellaneous household items. The allowed amounts are set by the IRS based on household size, not your actual spending.

IRS Local Standards

These cover housing, utilities, and transportation. For housing and utilities, the IRS uses county-level figures for Georgia. For transportation, there are separate standards for ownership costs and operating costs.

Actual Monthly Expenses

Some expenses are deducted at actual cost, including:

• Taxes: income taxes, payroll taxes, and self-employment taxes you’re legally obligated to pay
• Health insurance, disability insurance, and health savings account contributions
• Mandatory payroll deductions: union dues, retirement contributions required as a condition of employment
• Secured debt payments: monthly payments on your mortgage or car loan
• Priority debt payments: domestic support obligations, certain taxes
• Out-of-pocket health care expenses: there’s a minimum per-person allowance, and you can deduct actual amounts above that
• Education expenses for dependent children: up to a capped amount, if reasonable

What Happens After You Apply the Deductions?

After subtracting all allowed expenses from your CMI, you’re left with a “monthly disposable income” figure. Here’s how that number is used:

• If monthly disposable income × 60 is less than approximately $8,175: No presumption of abuse. You can file Chapter 7.
• If monthly disposable income × 60 is more than approximately $13,650: A presumption of abuse arises — Chapter 7 may be denied unless you can rebut it with special circumstances.
• If you fall in between: A presumption of abuse arises only if your five-year disposable income equals or exceeds 25% of your nonpriority unsecured debt.

These thresholds adjust periodically under the Bankruptcy Code, so confirm the current figures before filing.

What If You Fail the Means Test?

Failing the means test doesn’t necessarily mean you’re out of options for bankruptcy relief. You have several paths:

1. File Chapter 13 instead Chapter 13 has no means test income ceiling. If you have regular income, you can restructure your debt into a 3–5 year repayment plan. Learn more about how Chapter 13 bankruptcy works in Georgia.

2. Wait and refile Because CMI is calculated over the prior 6 months, your eligibility can change over time. A job loss, income reduction, or significant expense change can shift your numbers enough to qualify.

3. Rebut the presumption of abuse If a presumption of abuse arises, you may still be able to file Chapter 7 by documenting “special circumstances” — such as a serious illness, a significant gap in income, or other documented financial hardship that the standard calculations don’t capture.

4. Explore non-bankruptcy options Depending on your situation, debt settlement or negotiation may be worth considering. See our comparison of debt settlement vs. bankruptcy in Georgia for more on this.

Who Is Exempt from the Means Test?

Certain filers are not required to complete the means test at all:

Disabled veterans: If you are a disabled veteran (as defined by 38 U.S.C. § 3741(1)) and your debts were incurred primarily during active duty or while performing a homeland defense activity, you are exempt from the means test.

Primarily business debtors: If the majority of your debts are business debts rather than consumer debts, the means test does not apply. This is a meaningful distinction for entrepreneurs and sole proprietors.

Common Means Test Mistakes to Avoid

A few errors that can create problems on the means test:

Miscalculating the six-month lookback period. The period runs backward from the last day of the calendar month before you file — not the last six months of calendar year income.

Forgetting to exclude Social Security income. It’s a statutory exclusion. Including it can make you appear to earn more than you do and potentially disqualify you.

Using net income instead of gross. Taxes come out later in the calculation. If you deduct them upfront, you’re running the analysis incorrectly.

Not accounting for all allowed deductions. Most people are entitled to more deductions than they realize — particularly for secured debt payments and healthcare expenses. Missing them can make a passable case look like a failure.

The Means Test Is Just One Piece

Even after passing the means test, there are other bankruptcy eligibility requirements to satisfy — including completing a credit counseling course before filing, disclosing all assets and income accurately in your petition, and attending a 341 meeting of creditors. Georgia also has specific property exemptions that determine what you get to keep after discharge — the Georgia bankruptcy exemptions guide covers these in detail.

Have questions about whether you’d pass the means test? Review our bankruptcy FAQ or reach out directly. Whether you qualify for Chapter 7 or need to look at other options, the right path forward starts with understanding the numbers.