Money & Debt

Not everyone qualifies for bankruptcy. The rules for qualifying are different for Chapter 7 and Chapter 13. These are different Chapters of the bankruptcy code.

Chapter 7: the means test

The bankruptcy means test helps you figure out how much money you have left after paying basic living expenses. The leftover money is used to pay your creditors. If the leftover income is too high, you fail the means test. If you fail the means test, you can still file a Chapter 7 bankruptcy, but the court will presume that your bankruptcy is an abuse of the process. You would then have to provide additional evidence Anything used to show that something is true to the court in order to prove that you are not abusing the process. If you are able to prove this, then your bankruptcy will go through and your debts will be discharged. If you are not able to overcome this presumption, your bankruptcy case will be dismissed Cases dismissed with no further action anticipated. and you could also face additional sanctions. If you fail the means test, it is highly recommended that you consult with an attorney before deciding to file a Chapter 7 bankruptcy. 

Step #1: Find your annual income based on last 6 months

• Add up all of your gross income Income before taxes are taken out from the last full 6 months. Do not include partial months. So, for example, if you are filing on September 15th, include all income between March 1st and August 31st, using the date that you are actually paid.
• If you are married, you will also need your spouse's total income for the last 6 months. This is regardless of whether your spouse is also filing bankruptcy or not. This is because the means test is based on “housedhold” income.
• Multiply by 2. This is your annual income. So, for example, if your income over the last 6 months was $10,000, your annual income will be $20,000.

Step #2: Compare with annual median income

Find the annual median family income for your household size. In Illinois, for cases filed on or after April 1, 2024: 

• One person - $66,950
• Two people - $86,442  
• Three people - $105,897
• Four people - $125,022

Add $9,900 for beyond 4 in your household. Numbers current as of May 15, 2022. For possible updates see the U.S. Trustee Program Means Testing website.

If your annual income is less than the median income for your household size, you qualify for chapter 7 bankruptcy. You don't have to complete the rest of the means test.

If your current monthly income is more than the median family income in Illinois for your household size, you will have to complete the second part of the means test.

For the second part, you will need to see how much income you have left over after paying certain allowed monthly expenses. If your left over income after deducting these expenses is too high, you fail the means test.

An easy way to see if you pass the second part of the means test is to use this online bankruptcy means test calculator.

Chapter 13

You can file for Chapter 13 bankruptcy as long as:

• Your combined debts total less than $2,750,000, or 
• If you are married, your or your spouses' combined debts are less than $2,750,000.

You cannot file for Chapter 13 bankruptcy if, during the 180 days before filing a new bankruptcy, a prior bankruptcy was dismissed because:

• You willfully failed to follow a court order; or
• You requested a dismissal of your case after a creditor Someone who is owed money sought relief from the bankruptcy.

Also, within 180 days before filing bankruptcy, you must receive credit counseling from an approved credit counseling agency. A list of federally approved credit counseling agencies can be found on the US Trustee's website. Failure to receive the required credit counseling will result in your case being dismissed.