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If you’re overwhelmed by debt and considering bankruptcy in Massachusetts, you may have heard about something called the Means Test. It’s a critical part of the bankruptcy process, but it can also be one of the most confusing.
At Logan A. Weinkauf, P.C., we believe that understanding the Means Test is essential for making informed decisions about your financial future. In this blog, we’ll walk you through what the Means Test is, how it’s calculated, and why having an experienced bankruptcy attorney can make all the difference.
What Is the Massachusetts Means Test?
The Means Test is a formula used to determine whether you qualify to file for Chapter 7 bankruptcy, which allows you to eliminate most unsecured debts without having to repay them. It’s also used to calculate how much you’ll need to repay creditors in a Chapter 13 bankruptcy.
The test compares your household income to the median income for a household of your size in Massachusetts. If your income is below the state median, you typically qualify for Chapter 7. If it’s above, you’ll need to go through additional steps to see whether you have enough disposable income to repay your debts through a structured plan.
Why the Means Test Exists
The Means Test was introduced as part of the 2005 Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA). The goal was to prevent people with high incomes from taking advantage of Chapter 7 to wipe out debts they could reasonably afford to repay. In short, it ensures that those who can pay do pay, at least partially.
Step 1: Calculating Your Average Income
The first step in the Means Test is determining your average monthly income over the past six months prior to your bankruptcy filing. This includes income from:
- Wages, salaries, and bonuses
- Spousal support or child support
- Business or rental income
- Unemployment benefits
- Pension or retirement distributions
Note: Social Security benefits are generally excluded from this calculation.
The final calculation is done according to 11 U.S. Code §101(10A).
Step 2: Comparing Income to the Massachusetts Median
Now, compare your annual income to the state median income for a household of your size. These figures are updated regularly by the U.S. Trustee’s Office. As of early 2025, the estimated Massachusetts median incomes are:
- One-person household: ~$80,000
- Two-person household: ~$105,000
- Three-person household: ~$130,000
- Four-person household: ~$160,000
If your income is below the applicable median, you typically qualify for Chapter 7, and the Means Test ends here.
Step 3: Deducting Allowable Expenses
If your income is above the median, you’ll need to complete the full Means Test by deducting specific allowable expenses from your income. These include:
- Housing and utility costs (based on IRS standards for your area)
- Food, clothing, and household supplies
- Health insurance and out-of-pocket medical expenses
- Transportation and car payments
- Childcare or dependent care expenses
- Mandatory payroll deductions (e.g., taxes, union dues)
- Certain court-ordered payments (like child support or alimony)
What’s left after these deductions is your disposable income. If that number is low enough, you may still qualify for Chapter 7. If not, you may need to file under Chapter 13 and create a repayment plan based on what you can afford.
What If I Don’t Pass the Means Test?
Failing the Means Test doesn’t mean you’re out of options. Many individuals who don’t qualify for Chapter 7 find relief through Chapter 13 bankruptcy, where you can:
- Keep your property (like your home or car),
- Repay some of your debts over three to five years, and
- Discharge remaining eligible debt after your plan ends.
In fact, Chapter 13 is often the better choice for those who are trying to save a home from foreclosure or catch up on back taxes.
How Are Chapter 13 Payments Determined?
In Chapter 13, your monthly payment is based on your disposable income—the amount left after you pay essential living expenses. The Means Test helps determine this number.
For example, if you have $500 in disposable income after deductions, your Chapter 13 payment plan might require you to pay that amount toward your debts each month for 60 months. Some debts, like child support or recent tax obligations, must be paid in full. Others, like credit cards or medical bills, may only be partially repaid.
Why You Need a Bankruptcy Attorney
The Means Test involves a complex mix of math, state-specific rules, and federal legal standards. Even a small error in how you calculate income or deductions could lead to your case being dismissed—or you paying more than necessary.
At Logan A. Weinkauf, P.C., we help Massachusetts clients navigate the Means Test accurately and strategically. We can evaluate which chapter of bankruptcy will be best for you, maximize allowable deductions to reduce your disposable income, and help structure repayment plans that fit your budget and goals. Bankruptcy can offer you a clean slate—but only if it’s done right. Contact us today to take the first step toward financial freedom with confidence.