Chapter 7 Median Income Drops November 1, Impacting Means Test

means test going down

Chapter 7 Median Income Drops November 1, Impacting Means Test

The Department of Justice just announced that the first drop in median income for Chapter 7 bankruptcy in a while is happening on November 1, but the negative impact will be significant only for 1-person households in California.

This comes a few years after median income limits for Chapter 7 first reached record highs. They’ve been rising since. What goes up must come down, and all that.

Right now, the Calif 1-person household median income limit is a tick over $75,000.  However, for cases filed after after 11/1, the median income will reduce to a little under $72k.

For some people, this little change can make or break getting into Chapter 7.

The 2-person median drops a few hundred dollars, and 3-person and 4-person household medians actually increase a few hundred dollars.

Household size, then, becomes an even more crucial factor, because it’s possible that someone would fail the means test with a household of one. On the other hand, the same person might pass the means test with a household size of two.  It will really matter to get the household size right.

Read all about the Median Income limits.


The median income numbers are important for the bankruptcy means test, which helps decide who can file Chapter 7 bankruptcy.  This is the type where debtors don’t repay their debt because they can’t afford to.

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On the other hand, someone can earn more than the California median income (or for their state) and still qualify for Chapter 7, but it may take a bit more work. The alternative for those who just aren’t eligible is Chapter 13 bankruptcy, which is like an affordable debt consolidation.

Plan and file accordingly. In bankruptcy, timing is a big part of the planning.

If you are in the greater Los Angeles County, let’s set up a consult and chat about your circumstances.