Introduction — Why the Means Test Matters in California
If you’re considering consumer bankruptcy in California, the federal “means test” determines whether you can file Chapter 7 (liquidation) or whether your income requires a Chapter 13 repayment plan or other alternatives. The test compares your recent income to the state median and then applies standardized and actual expense rules to find your disposable income. Passing the means test usually clears the path to a Chapter 7 discharge; failing it triggers a “presumption of abuse” that requires additional steps to overcome or an alternate strategy.
This article explains the practical steps of the California means test, how to calculate it, what causes a presumption of abuse, and the realistic next steps if you don’t pass.
Step-by-step: How the Means Test Is Calculated
1. Determine which forms apply
- Chapter 7: Official Forms 122A-1 (Statement of Your Current Monthly Income) and 122A-2 (Means Test Calculation). If you believe the presumption of abuse does not apply, use Form 122A-1Supp.
- Chapter 13: Official Forms 122C-1 and 122C-2 for the disposable-income calculation.
2. Calculate current monthly income (CMI)
Add all sources of regular income received during the last six full months (wages, self-employment, pension, rental, etc.), divide by six to get the average monthly income, then multiply by 12 to compare to the state median (the forms and instructions walk you through this). If you’re filing jointly or have household members, use the household size for the median comparison.
3. Compare to California’s median family income
If your annualized average income is below the median for California for a household your size, you generally “pass” the means test and are not subject to the presumption of abuse under 11 U.S.C. § 707(b). If your income is above the median, you proceed to the full deductions-based means test. The U.S. Trustee publishes the state median figures used on the Official Forms and updates them annually.
4. Complete the full Means Test (if above median)
The full means test (Form 122A-2 for Chapter 7) subtracts allowed expenses from your monthly income. Expense allowances come from two sources:
- National Standards — IRS-based allowances for food, clothing, and other items.
- Local Standards — IRS-based housing, utilities, and transportation allowances that vary by region.
If actual expenses are higher and you can document them, courts sometimes permit actual expense claims in place of the standards, but the standards are presumptive and commonly used. Other deductions include amounts required for secured debt payments (like a car payment), priority debts, and certain chapter-13 administrative multipliers when applicable.
5. Outcome of the calculation
| Result | What it means |
|---|---|
| Disposable income at or below statutory thresholds | You pass the means test — likely eligible for Chapter 7 discharge (no presumption of abuse). |
| Disposable income above thresholds | Presumption of abuse arises under §707(b)(2) — Trustee or creditors may object, and you must rebut or pursue Chapter 13/other options. |
Exact dollar thresholds and form line numbers are periodically adjusted (the Judicial Conference updates certain dollar amounts; check the Official Forms and U.S. Trustee guidance for the filing date that applies to your case).
What ‘Failing’ the Means Test Means — Practical Options
Failing the means test does not automatically block you from relief, but it changes the path and raises the stakes. Key considerations and options include:
- Presumption of abuse and rebuttal: If the presumption of abuse arises, you can try to rebut it by showing special circumstances (additional necessary expenses or allowances not reflected in the standards) or other good-faith reasons why granting relief under Chapter 7 would not be abusive. Use Form 122A-1Supp and supporting declarations and documents. Courts evaluate the totality of circumstances.
- Convert or file Chapter 13: Many debtors who do not pass the means test file Chapter 13 or convert to Chapter 13. In Chapter 13 you propose a plan to pay creditors over 3–5 years based on disposable income using Forms 122C-1/122C-2. This option can save a home from foreclosure or allow secured debt to be paid over time.
- Adjusting your filing date or paperwork: The median income and IRS standards used for the means test depend on the date you file. For some debtors, timing (even by a few weeks) can change which standards and median figures apply. The U.S. Trustee and forms show date ranges — make sure the forms you submit match the filing date.
- Alternatives to bankruptcy: If Chapter 13 is impractical, consider debt-management plans, negotiated settlements with major creditors, or targeted settlement/forbearance — but these are fact-specific and may not address all debts.
Local practice matters: Los Angeles and other California districts may have local procedures for filing means-test forms, multipliers for chapter-13 administrative costs, and e-filing instructions — check your district’s bankruptcy court website or consult a Los Angeles bankruptcy attorney for court-specific guidance.
Practical Tips, Common Pitfalls, and Next Steps
Top practical tips
- Use accurate six-month records. Misreporting income (e.g., inconsistent business income) is a frequent problem; assemble pay stubs, bank records, and tax returns.
- Document exceptions and special circumstances. Medical expenses, temporary unemployment, high childcare or eldercare costs, or nonstandard transportation needs can matter — collect receipts and declarations.
- Run the test both ways. Before filing, use the Official Forms (122A/122C) or a reputable means-test calculator and then have a qualified bankruptcy attorney review them — small differences in allowed expenses can change the result.
- Watch filing-date rules. Median income figures and adjusted dollar amounts are tied to filing-date ranges; use the correct dataset for your petition date. The U.S. Trustee updates these figures and the Judicial Conference adjusts dollar amounts periodically.
When to get professional help
If your calculation shows you may fail the means test, consult a bankruptcy attorney experienced in California exemptions and means-testing. An attorney can:
- Confirm whether special circumstances justify actual expenses instead of standards;
- Prepare a rebuttal to the presumption of abuse if appropriate;
- Advise whether Chapter 13 or alternatives are better for your goals (keeping a home, curing arrears, minimizing long-term cost); and
- Help you gather documentation and file the correct Official Forms on time.
For Los Angeles filers, look for local self-help resources, free clinics, or pro bono assistance if cost is a barrier — but avoid debt-relief companies that charge large upfront fees for services you can get from vetted nonprofit credit counselors or attorneys.
Final note: Means-test rules are technical and updated regularly. Use the U.S. Trustee’s means-testing pages and the official forms as your primary sources, and verify you’re using the dataset that corresponds to your filing date.