What income counts in the 707(b) means test?

Current Monthly Income (CMI) under 11 USC § 707(b)(2) is the average of all gross income received during the six full calendar months before filing. It includes wages, salary, business income, rental income, pension and retirement distributions, regular contributions from family members, and unemployment compensation. Social Security benefits are excluded from CMI by statute. Tax refunds, one-time gifts, and proceeds from sale of property are not counted. The number is annualized and compared to the median income for your household size in your state.

How do I rebut the presumption of abuse under 707(b)(2)(B)?

If the means test triggers a presumption of abuse, 11 USC § 707(b)(2)(B) lets you rebut it by documenting 'special circumstances' that justify additional expenses or income adjustments. The most common rebuttals are serious medical conditions, active military duty under a call or order, recent job loss, or a non-recurring spike in the six-month lookback income. You must itemize each special circumstance, attach documentation, and show the adjusted numbers no longer support the presumption. The debtor carries the burden by a preponderance of the evidence.

Does Social Security income count in the means test?

No. Social Security benefits are excluded from Current Monthly Income under the means test, even though they are listed on Schedule I. This exclusion applies to retirement benefits, SSDI, and SSI. Courts have ruled consistently that Congress meant 'benefits received under the Social Security Act' to be left out of the 707(b) calculation. This often allows higher-income retirees to pass the means test even when their total household income exceeds the state median.

What happens if I fail the 707(b) means test?

Failing the means test creates a rebuttable presumption that filing Chapter 7 is an abuse. The U.S. Trustee or any party in interest can file a motion to dismiss the case under 11 USC § 707(b). If you cannot rebut the presumption through special circumstances, the court will typically offer you a choice: convert to Chapter 13 (where you repay creditors over 3-5 years) or have your Chapter 7 case dismissed. Most debtors convert rather than lose the protection of bankruptcy entirely.

Can the totality of circumstances test dismiss a case that passes the means test?

Yes. Even if you pass the mechanical means test, 11 USC § 707(b)(3) lets a court dismiss for abuse based on the totality of the circumstances of the debtor's financial situation. Courts examine whether the debtor has the ability to pay creditors despite passing the numerical test, whether expenses are reasonable, and whether the debtor acted in bad faith. Inflated expenses, recent luxury purchases, or unusually high voluntary retirement contributions can support a totality dismissal even when the formula passes.

Who can file a motion to dismiss under 707(b)?

Three parties can move to dismiss under 707(b): the United States Trustee (most common), the panel trustee assigned to the case, or any party in interest such as a creditor. The court can also raise abuse on its own initiative. The U.S. Trustee must review every above-median case and file a statement within ten days of the meeting of creditors stating whether the presumption arises. Creditors typically file 707(b) motions only when significant amounts are at stake.

11 U.S.C. Section 707(b) - Means Test and Abuse

The means test under 11 U.S.C. 707(b) decides whether you qualify for Chapter 7. If your income is below your state's median, you pass automatically. If it is above, you subtract allowed expenses; too much left over creates a "presumption of abuse" that can push you into Chapter 13 or get a Chapter 7 dismissed. The test measures the six months of income before filing, not your current paycheck.

What Is Section 707(b)?

Section 707(b) of Title 11 of the United States Code (Dismissal of a Case - Abuse) is a foundational provision of the Bankruptcy Code. It provides the specific framework for determining when a Chapter 7 filing constitutes abuse, including the mechanical means test and the totality of circumstances analysis. This subsection was added by BAPCPA in 2005 and transformed Chapter 7 eligibility.

Official citation: 11 U.S.C. § 707(b)

Key Provisions of Section 707(b)

The means test under 707(b)(2) follows a mechanical calculation:

Step 1 - Current Monthly Income (CMI): Average your gross income over the 6 full calendar months before filing. Include all sources: wages, business income, pensions, Social Security (for means test purposes), rental income, and contributions from others.
Step 2 - Compare to State Median: If your annualized CMI is below your state's median income for your household size, you pass. No further means test analysis is required.
Step 3 - Deductions: If above median, subtract allowed deductions: IRS National Standards (food, clothing, personal care), IRS Local Standards (housing, transportation), actual secured debt payments, priority claims, and certain other expenses.
Step 4 - Disposable Income Test: Multiply remaining monthly disposable income by 60. If the result is above $15,150, abuse is presumed. If between $9,075 and $15,150, abuse is presumed only if you could pay 25% or more of unsecured claims. Below $9,075, no presumption.

Key form: The means test is calculated on Official Form 122A-1 (Chapter 7 Statement of Your Current Monthly Income) and Form 122A-2 (Chapter 7 Means Test Calculation) if above median.

How This Affects You

Understanding 707(b) is critical for pre-filing planning:

The 6-month lookback: If you received a bonus, severance, or had unusually high income recently, those months count. Consider whether delaying your filing until high-income months fall outside the window makes sense.
Household size matters: More dependents means a higher median income threshold. Accurately counting your household size (which is not defined in the Code and varies by district) can determine your result.
Marital deduction: If married and filing individually, you can deduct your non-filing spouse's share of expenses even though their income is included in CMI.
Special circumstances (707(b)(2)(B)): Even if the numbers create a presumption of abuse, you can rebut it by documenting special circumstances - serious illness, disability, active military duty, or other factors that demonstrate the expenses or income adjustments are necessary.

Warning: Attempting to manipulate the means test through pre-filing transfers, income reduction schemes, or fabricated expenses can result in denial of discharge under Section 727(a)(2) or criminal prosecution for bankruptcy fraud under 18 U.S.C. Section 152.

Related Bankruptcy Code Sections

Section 707(b) works in conjunction with several other provisions of the Bankruptcy Code:

Section 707(a) - General dismissal for cause
Section 109 - Who may file
Means Test Calculator - Interactive means test tool
Section 1325 - Chapter 13 confirmation (if you convert)

Understanding how these sections interact is critical for anyone navigating the bankruptcy process, whether as a debtor, creditor, or attorney.

Topical deep-dives on the Section 707(b) means test

Form 122A-1 current monthly income for Chapter 7 - the six-month look-back income computation, the marital-adjustment line, and the inclusion-and-exclusion rules for benefits, gifts, and irregular receipts.
Form 122A-2 deductions and the presumption of abuse - the IRS Local and National Standards, the secured-debt and priority-debt deductions, and the disposable-income computation that triggers or defeats the presumption.
Form 122C Chapter 13 disposable income and applicable commitment period - the parallel means-test mechanics in Chapter 13, the three-year versus five-year commitment period determination, and the Lanning forward-looking-projection standard.
Rebutting the presumption of abuse under Section 707(b)(2)(B) - the special-circumstances showing, qualifying circumstances under In re Castle and In re Pageau, and the evidentiary burden on the debtor.

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