Bankruptcy Means Test NY
Guidance for New Yorkers during bankruptcy means testing
The New York bankruptcy means test helps determine whether a filer may qualify for Chapter 7 or how a Chapter 13 repayment plan may be structured. The calculation compares household income to New York median income figures and may also consider allowable expenses based on federal and local standards.
This guide explains how the means test works, what information is used, and why accurate calculations matter before filing for bankruptcy in New York.
What Is the Bankruptcy Means Test?
The bankruptcy means test is a financial assessment that determines your bankruptcy options under bankruptcy law. It primarily applies to consumer debtors—individuals or families whose debts consist mostly of credit cards, medical bills, and personal loans. Business-related debts are generally not subject to this test.
While the framework of the means test is the same nationwide based on the Bankruptcy Code, the calculations use state and local data. In New York, this includes median income figures and IRS local standards for housing, utilities, and transportation. If you’re considering Chapter 7 or Chapter 13 bankruptcy, understanding how the means test works and these New York-specific details is essential because they directly affect how your bankruptcy case proceeds.
Breaking Down the Bankruptcy Means Test
Means testing in the US is primarily governed by federal law. Its purpose is to prevent abuse of the bankruptcy system by measuring a filer’s financial capacity and ensuring repayment options are fully considered if they have sufficient income.
New York follows federal bankruptcy law. The means test applies in all five boroughs — Manhattan, Brooklyn, Queens, The Bronx, and Staten Island — as well as upstate counties. The numbers used in the test are updated regularly by the US Trustee Program, so your timing matters.
The test follows a two-step structure:
State Median Income Comparison
The filer’s household gross income over the six months prior to filing is averaged and compared to their state median income for households of a similar size.
As of 2026, it goes as follows:
- $73,272 for 1 earner
- $92,902 for a family of two
- $115,579 for a family of three
- $139,040 for a family of four
- Add $11,100 for each additional individual beyond 4.
The results of this step have different implications under Chapter 7 and Chapter 13, and determine whether further analysis of disposable income is needed.
Allowable Expense Deductions (if above median)
If your income is above the median, you don’t automatically fail. You move to Part 2. This is where allowed deductions come in.
The disposable income test subtracts IRS-approved expenses from your monthly income. Deductible costs may include housing, food, transportation, taxes, childcare, and certain secured debt payments. What remains is your monthly “disposable income.”
If that figure is too high, you may not qualify for Chapter 7 under 11 U.S.C. § 707(b). The court may find the filing an abuse of the process. You would then need to consider a Chapter 13 repayment plan instead.
Income and expense standards are updated periodically, so using current figures is essential to ensure an accurate calculation.
What “Abuse” Means Under the Law
A presumption of abuse arises when your disposable income, multiplied over 60 months, would repay a significant portion of your unsecured debt. The exact thresholds are set by federal statute. In New York, the US Bankruptcy Court for the Southern, Eastern, or other districts will review the means test form as part of your petition.
Purpose of the Means Test in Chapter 7
Chapter 7 bankruptcy is a legal process that allows individuals to eliminate most unsecured debts, such as credit cards, medical bills, and personal loans. It is designed for people who do not have enough income to repay these debts and need a fresh financial start.
The means test is the key parameter used to determine whether a debtor qualifies for Chapter 7. Because Chapter 7 results in many debts being left unpaid, the calculation is used to ensure that only debtors who truly lack disposable income are eligible for Chapter 7 relief.
Means testing under Chapter 7 follows the same two-step structure described previously. Here’s how the results are applied in Chapter 7 cases:
- Below-Median Outcome: If your six-month average household income is below the New York median for your household size, you typically pass the means test automatically.
- Above-Median Outcome: If your income exceeds the median, you may still qualify for Chapter 7, but you’ll need to proceed to the next calculation step—deducting your allowed expenses and measuring for disposable income. If you have little to no money left after deductions, you generally qualify for Chapter 7. But if you have significant money left after deductions, you may be ineligible for Chapter 7 and may need to consider other options, such as Chapter 13.
Bankruptcy trustees review Chapter 7 filings to verify compliance with the means test. If there are concerns, the trustee assigned to your case may request additional documentation or challenge the filing. Depending on the circumstances, this could lead to a forced conversion to Chapter 13 or dismissal of the Chapter 7 petition, keeping you further from having your debts discharged.
Purpose of the Means Test in Chapter 13
Chapter 13 bankruptcy is a repayment-based bankruptcy that allows individuals with regular income to reorganize their debts and pay them off over time under a court-approved plan. It provides a structured way to manage unsecured and secured debts without losing your assets.
Unlike Chapter 7, the result of the means test in Chapter 13 does not determine your eligibility. Instead, it shapes the structure of your repayment plan.
By law, Chapter 13 cases last between 3 and 5 years. The means test determines just how long the repayment period should last in each case and how much should be repaid to creditors:
- Below-Median Income: If your income is below the New York median for your household size, the repayment period is usually three years. In such cases, your monthly payments will be structured to creditors based on your projected disposable income.
- Above-Median Income: If your income is above the state median, the repayment period is usually five years. You’ll also need to complete Step 2 of the means testing process—calculating allowable expenses and disposable income. If the calculation shows positive disposable income, then:
- You are required to commit all disposable income to the plan. This means the minimum amount you’ll need to pay throughout the five-year period would likely increase, taking into account the excess disposable income you have.
An experienced NYC bankruptcy attorney can ensure the means testing rules are correctly applied to your case and that your filing reflects your true financial picture.
Contact the Law Offices of Wenarsky and Goldstein, LLC Today
If you are considering bankruptcy in New York, speaking with a bankruptcy attorney may help you understand how the means test applies to your income, expenses, and filing options. The Law Offices of Wenarsky and Goldstein, LLC, can review your financial information, explain the Chapter 7 and Chapter 13 considerations, and help you evaluate possible next steps.
From the first calculation through the final filing, our goal is to ensure your case reflects your real financial situation and complies with the rules that matter most.
Contact us today to get started.
Frequently Asked Questions
1. Can I retake the means test if I fail it the first time?
Yes — if your income drops in the months before you file, you may qualify when you reapply. The test looks at a six-month average, so timing your filing date can matter.
2. Does the means test apply if I only have business debts?
No. If most of your debt comes from running a business, the means test does not apply to you. You can file Chapter 7 without passing it.
3. What happens to the means test if my spouse has income but isn’t filing?
In most cases, your spouse’s income still counts toward the household total on the means test. A lawyer can help you apply the correct deductions to reduce that number.
4. Can the means test result change after I file?
No — the test uses your income from the six months before your filing date and stays fixed. Changes in your income after filing do not affect the result.
5. Does passing the means test mean my Chapter 7 case will be approved?
Passing the test is a key step, but the court still reviews your full financial picture. Other factors, like recent large transfers or fraud concerns, can still affect your case.
Call the Law Office of Wenarsky & Goldstein
At the Law Offices of Wenarsky & Goldstein, LLC, our New York and New Jersey attorneys are experienced and knowledgeable in bankruptcy, estate planning and probate, guardianship, special needs planning, and real estate law. To learn more about how we can assist you with your legal needs, call us today at 973-453-2838.
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