Almost everyone who calls about bankruptcy has heard of the means test, and almost no one has heard it described accurately. The common version is that you have to be poor enough to file Chapter 7. That is not what the statute does. The means test is not a poverty test, and it does not look at what you earn today.
What it actually does is compare two things. First, your household’s income over the six calendar months before you file, annualized, against the median family income for a Wisconsin household of your size. If you fall at or below that line, you are done — nobody may bring a means-test motion against you at all. If you fall above it, you move to a second calculation, in which the question is no longer how much you make but how much is left after a schedule of allowed deductions, most of them set by the IRS rather than by your actual budget.
People fail the first test and pass the second all the time. People with uncomfortable incomes qualify, and people with modest incomes occasionally do not. Running the calculation is the only way to find out.
The first gate: Wisconsin’s median family income
Under 11 U.S.C. § 707 (b) (7) (A), no judge, United States trustee, trustee, or other party in interest may file a motion under § 707 (b) (2) if your current monthly income, multiplied by 12, is equal to or less than the median family income for your State and household size. That is a genuine safe harbor, and it is where most Chapter 7 cases in the Eastern District of Wisconsin — which takes in Waukesha, Milwaukee, Washington, Ozaukee, Racine, Kenosha, and twenty-two other counties under 28 U.S.C. § 130 (a) — are resolved.
The figures are published by the U.S. Trustee Program and revised on a rolling basis. For cases filed on or after July 15, 2026, Wisconsin’s numbers are:
- 1 earner — $71,168
- 2 people — $90,252
- 3 people — $108,516
- 4 people — $133,384
For a household larger than four, add $11,100 per additional person. That figure is the annualized version of the $925 per month that §§ 707 (b) (6) (C) and (7) (A) (iii) now specify, following the Judicial Conference’s adjustment effective April 1, 2025.
Note the effective date, and take it seriously. These are not fixed numbers. They move, the adjustments are not announced to the public in any way you would notice, and the Chapter 7 you read about on a forum in 2024 was decided against a different table. Check the figure for the month you intend to file.
“Current monthly income” is a term of art, and the traps are in the definition
This is where the calculation is usually botched, and it is botched by people who are telling the truth about their income.
Section 101 (10A) defines current monthly income as the average monthly income from all sources that the debtor receives — and in a joint case, that the debtor and spouse receive — without regard to whether it is taxable, derived during the six-month period ending on the last day of the calendar month immediately before the case is commenced.
Four consequences follow, and each of them has flipped a real case:
It is a backward look, not a snapshot. If you were laid off in September, your lookback period may still be carrying the salary you no longer have. Sometimes the right advice is to wait a month or two and let the high months roll off the back of the window. Sometimes it is the reverse: a bonus about to land will push you over, and filing before it does is the whole strategy. The six-month window is the single most important piece of timing in a consumer bankruptcy, and it is the piece clients most often never hear about.
Money other people give you can count. Under § 101 (10A) (B) (i), current monthly income includes any amount paid by anyone other than the debtor, on a regular basis, for the household expenses of the debtor or the debtor’s dependents. An adult child’s monthly contribution to the mortgage is income to you for this purpose, even though no tax form will ever record it.
Social Security is excluded. Section 101 (10A) (B) (ii) (I) excludes benefits received under the Social Security Act outright. So are payments to victims of war crimes, crimes against humanity, and terrorism, and — under subclause (IV) — compensation, pension, pay, annuity, or allowance paid under titles 10, 37, or 38 in connection with a disability, a combat-related injury, or the death of a member of the uniformed services. A retired person living primarily on Social Security may have a current monthly income near zero for means-test purposes regardless of what arrives in the account each month.
Your spouse’s income counts even if your spouse is not filing — with one exception. In a case that is not a joint case, § 707 (b) (7) (B) allows the non-filing spouse’s income to be left out only if the spouses are separated under applicable nonbankruptcy law, or are living separate and apart other than for the purpose of evading the subsection, and the debtor files a statement under penalty of perjury saying so and disclosing the aggregate cash the spouse has contributed. Short of that, a married person filing alone is still measured against the household’s combined income. Wisconsin’s marital property rules make this worth careful attention; we have written separately about how a spouse’s debt can become your debt here.
The second gate: the 60-month calculation
If annualized current monthly income exceeds the median, you complete Official Form 122A-2 and the question changes. Section 707 (b) (2) (A) (i) directs the court to presume abuse if current monthly income, reduced by the amounts determined under clauses (ii), (iii), and (iv), and multiplied by 60, is not less than the lesser of (I) 25 percent of your nonpriority unsecured claims, or $10,275, whichever is greater; or (II) $17,150. Those two dollar figures are the amounts in effect for cases commenced on or after April 1, 2025.
Unpack that and it becomes a three-step sort of the 60-month number:
- Below $10,275 — no presumption of abuse, whatever your income was.
- Above $17,150 — the presumption arises.
- Between the two — compare the 60-month figure against 25 percent of your nonpriority unsecured debt. Below that, no presumption; at or above it, the presumption arises.
The deductions in clause (ii) are the part that surprises people, because they are not your expenses. They are the applicable monthly amounts specified under the IRS National Standards and Local Standards, plus your actual expenses in the categories the IRS designates Other Necessary Expenses, for the area in which you reside. The housing-and-utilities and transportation allowances are set by county, which means a New Berlin filer and a filer three counties north do not get the same number. Payments on debts are excluded from clause (ii) entirely; secured-debt payments and priority claims come in separately under clauses (iii) and (iv), each as a 60-month average.
Several deductions are routinely missed. Clause (ii) (I) expressly includes reasonably necessary health insurance, disability insurance, and health savings account expenses, and permits an additional food-and-clothing allowance of up to 5 percent of the IRS National Standards figures where that is shown to be reasonable and necessary. Clause (ii) (II) allows the continuation of actual expenses reasonably necessary to care for an elderly, chronically ill, or disabled household member or immediate family member who cannot pay those expenses. Clause (ii) (IV) allows the actual expenses of sending a dependent child under 18 to a private or public elementary or secondary school, not to exceed $2,575 per year per child — the amount in effect for cases commenced on or after April 1, 2025 — on documentation and a detailed explanation. Clause (ii) (V) allows home-energy costs above the Local Standard where the actual expense is documented and shown to be reasonable and necessary.
The statute also directs, in clause (ii) (I), that expenses incurred to maintain the debtor’s and the family’s safety from family violence are included in monthly expenses, and that those expenses are to be kept confidential by the court.
If the presumption arises, it is not the end
Section 707 (b) (2) (B) (i) permits rebuttal by demonstrating special circumstances — the statute’s own examples are a serious medical condition and a call or order to active duty in the Armed Forces — to the extent they justify additional expenses or adjustments to income for which there is no reasonable alternative. The showing is a strict one. Clause (ii) requires the debtor to itemize each additional expense or adjustment, produce documentation for it, and give a detailed explanation of why it is necessary and reasonable; clause (iii) requires an attestation under oath; and clause (iv) requires that the adjustments actually bring the 60-month figure below the same thresholds. “Things have been hard” is not a special circumstance. A documented, quantified, unavoidable expense can be.
There is also a category of debtor the means test simply does not reach. Under § 707 (b) (2) (D), the court may not dismiss or convert a case on any form of means testing where the debtor is a disabled veteran as defined in 38 U.S.C. § 3741 (1) and the debt was incurred primarily while on active duty or performing a homeland defense activity; or, for a reservist or National Guard member called to active duty of not less than 90 days after September 11, 2001, while on that duty and for 540 days after release. If that describes you, say so at the first meeting. It is dispositive and it is frequently overlooked.
And passing is not the end either
A debtor can clear the means test and still lose the case. Section 707 (b) (3) provides that where the presumption does not arise or has been rebutted, the court shall consider whether the petition was filed in bad faith, and whether the totality of the circumstances of the debtor’s financial situation demonstrates abuse. That is a discretionary inquiry with no arithmetic in it, and it is where luxury spending on the eve of filing, transfers to relatives, and conspicuously understated income get litigated.
One further limit is worth naming because it cuts the other way. Section 707 (b) (1) applies only to an individual debtor “whose debts are primarily consumer debts.” A filer whose obligations are predominantly business debt is outside § 707 (b) altogether — a distinction that matters to failed sole proprietors far more often than they realize.
Failing the means test is not a verdict
If the presumption arises and cannot be rebutted, the realistic alternative is Chapter 13, and the same median figure follows you there. Section 1325 (b) (3) directs that where annualized current monthly income exceeds the State median for the household size, the amounts reasonably necessary to be expended are determined under § 707 (b) (2) (A) and (B) — the same IRS-standard calculation. And § 1325 (b) (4) sets the applicable commitment period at three years, or not less than five years where combined annualized current monthly income is not less than the applicable median. Below the median, a three-year plan; at or above it, five. The same number that decides whether you may file Chapter 7 decides how long you will be in Chapter 13 if you cannot.
That is not nothing, but it is not the disaster clients fear either. A Chapter 13 plan stops garnishment and foreclosure on the day it is filed, pays unsecured creditors a percentage rather than the whole, and discharges the balance at completion. The choice between the chapters is a question of arithmetic and timing, not of worthiness.
What to do before you decide
In order:
- Pull six months of pay records — every household member, every source, gross.
- Fix your household size honestly. It is household, not tax dependents, and the two often differ.
- Identify anything excluded under § 101 (10A) (B) (ii), Social Security above all.
- Check the current median figure for the month you expect to file, not the one you read last year.
- Before you file, find out whether waiting a month changes the answer. Often it does.
Then have someone run Form 122A-2 with you. The form is arithmetic, but the inputs are judgment, and the judgment is where the case is won.
Talk to a New Berlin bankruptcy lawyer
Carson Law Office represents people considering Chapter 7 and Chapter 13 throughout New Berlin, Waukesha County, Milwaukee, West Allis, Wauwatosa, and the surrounding communities. If you want to know whether you qualify, whether waiting would change the answer, or what a Chapter 13 plan would actually cost you, call (262) 860-8932 or email christopher@carsonlawoffice.com. You can also read more about our bankruptcy practice or contact us to arrange a consultation.
Carson Law Office · 15350 West National Avenue, Suite 101, New Berlin, WI 53151 · (262) 860-8932
This article is general information about Wisconsin and federal law and is not legal advice. The median-income figures and the statutory dollar thresholds discussed here are revised periodically — the figures stated are those published for cases filed on or after July 15, 2026 and, for the § 707 (b) thresholds, those effective April 1, 2025 — and every case turns on its own facts. Speak with an attorney about your specific situation.