How to Qualify for Bankruptcy: Means Test, Debt Caps, Waiting Periods

To qualify for bankruptcy, you generally have to pass an income-based test for the chapter you want to file under, complete a credit counseling course in the 180 days before filing, submit a complete petition with supporting schedules and the filing fee, and clear any waiting period left over from a prior bankruptcy case. Chapter 7 (liquidation) is aimed at filers whose income falls below their state’s median; Chapter 13 (a three-to-five-year repayment plan) is available to people with regular income whose debts sit under set caps. Both chapters share the counseling, paperwork, and fee requirements.

Chapter 7 Income Eligibility: The Means Test

Chapter 7 uses a screening tool called the means test to decide whether letting you erase your debts would be an abuse of the bankruptcy system.¹ Start by averaging your gross monthly income over the six full calendar months before the filing date. If that average falls below the median income for a household of your size in your state, you pass and can proceed with Chapter 7.

If your income is above the median, the test moves to a second step. The court subtracts allowable expenses — housing, transportation, food, health insurance, childcare, and other necessities — using a combination of IRS expense standards and your actual costs.¹ What’s left is your disposable income. Multiply it by 60 (five years of hypothetical payments). If that total clears a statutory threshold, the court presumes you could repay a meaningful portion of your debts through a Chapter 13 plan, and your Chapter 7 case will likely be dismissed or converted.

You can still try to overcome that presumption by showing special circumstances, such as a serious medical condition or a military deployment, that raise your expenses or reduce your earning capacity. The court decides those arguments case by case.

Chapter 13 Eligibility: Regular Income and Debt Caps

If you earn too much for Chapter 7, or you want to keep property while repaying creditors over time, Chapter 13 is the alternative. To qualify, you need a regular source of income — wages, self-employment earnings, pension payments, or other steady funds — enough to make the monthly payments a court-approved plan requires.² Plans run three years if your income is below the state median and five years if it’s above.³

Chapter 13 also caps how much debt you can carry. Your total unsecured debts (credit cards, medical bills, personal loans) cannot exceed $526,700, and your total secured debts (mortgages, car loans) cannot exceed $1,580,125.³ If your debts sit above those limits, Chapter 13 isn’t available and you’d have to consider Chapter 11, which has no ceiling but is more complex and expensive.

The Credit Counseling Requirement Before You File

You must complete a credit counseling session within the 180 days before you file your petition.² The session has to come from a nonprofit agency approved by the United States Trustee Program, or by the Bankruptcy Administrator in Alabama and North Carolina.⁴ A counselor reviews your finances, helps you build a budget, and walks through alternatives to bankruptcy. Sessions can be completed by phone or online, typically run 60 to 90 minutes, and fees usually range from $10 to $50. If you can’t afford the fee, ask the agency about a waiver.

When you’re done, the agency issues a certificate of completion. File that certificate with your petition. Without it, the court will reject your case. In a true emergency, you can request an extension of up to 30 days (or 45 days for cause) to finish the counseling after filing.²

Documents and Forms You Have to File

A bankruptcy filing needs thorough financial documentation. Before you start filling out court forms, pull together:

Income records: tax returns for the previous two years and pay stubs from the last six months
Expense records: monthly costs for housing, utilities, food, insurance, transportation, and childcare
An asset inventory: real estate, vehicles, bank accounts, retirement accounts, household goods, and any other property you own
A debt inventory: everyone you owe, including account numbers, balances, and whether the debt is secured by collateral

The main court document is Official Form 101, the Voluntary Petition for Individuals Filing for Bankruptcy.⁵ It collects your identifying information and records which chapter you’re filing under. Alongside it, you file several supporting schedules:

Schedule A/B lists all property you own or hold an interest in
Schedule C identifies the property you claim as exempt
Schedules D and E/F categorize your debts as secured, priority, or general unsecured
Schedule I details your current monthly income from all sources
Schedule J itemizes your monthly expenses

Every schedule is signed under penalty of perjury. Providing false information or hiding assets can lead to denial of your discharge, fines of up to $250,000, or imprisonment of up to 20 years.⁵

Filing Fees and Fee Waivers

You file the completed paperwork with the bankruptcy court in your federal judicial district, and many courts accept electronic filings. The filing fee is $338 for a Chapter 7 case and $313 for a Chapter 13 case. If you can’t afford the Chapter 7 fee, you can submit Official Form 103B to request a fee waiver.⁶ Both chapters also let you ask to pay the fee in installments.

Waiting Periods If You’ve Filed Before

If you’ve been through bankruptcy before, you have to wait a set number of years before you can receive a discharge in a new case. The waiting period depends on which chapters are involved:⁷

Chapter 7 after a prior Chapter 7: eight years from the date the earlier case was filed
Chapter 13 after a prior Chapter 7: four years from the date the earlier case was filed
Chapter 7 after a prior Chapter 13: six years, unless the earlier plan paid 100% of unsecured claims, or paid at least 70% and was proposed in good faith
Chapter 13 after a prior Chapter 13: two years from the date the earlier case was filed

The clock runs from filing date to filing date, not from discharge date. You can file a new case before the waiting period expires, but the court will not grant a discharge in that case until the required time has passed.

What Qualifying Doesn’t Get You

Meeting the eligibility rules gets your case accepted; it doesn’t guarantee that every debt disappears. Federal law lists categories that survive a discharge regardless of chapter, including domestic support obligations, most student loans (absent an undue hardship showing), certain recent tax debts, debts from fraud or willful injury, DUI-related liability for death or personal injury, and government fines and penalties.⁸

And qualifying to file is not the same as qualifying for a discharge. After filing, you have to complete a second course, a personal financial management class, that’s separate from the pre-filing counseling and cannot be taken at the same time.⁴ The certificate has to be submitted within 60 days after your scheduled meeting of creditors. Miss that deadline and the court can close your case without discharging any debt, meaning you’d finish the whole process still owing everything.⁷

1
Office of the Law Revision Counsel. 11 USC 707 – Dismissal of a Case or Conversion to a Case Under Chapter 11 or 13
2
Office of the Law Revision Counsel. 11 U.S. Code 109 – Who May Be a Debtor
3
United States Courts. Chapter 13 – Bankruptcy Basics
4
U.S. Courts. Credit Counseling and Debtor Education Courses
5
Bankruptcy Court. Official Form 101 Voluntary Petition for Individuals Filing for Bankruptcy
6
United States Courts. Application to Have the Chapter 7 Filing Fee Waived
7
Office of the Law Revision Counsel. 11 U.S. Code 727 – Discharge
8
Office of the Law Revision Counsel. 11 U.S. Code 523 – Exceptions to Discharge