IRS National and Local Standards, secured-debt amortization, priority debts, the Chapter 13 administrative allowance, and how Section 707(b)(2) converts a disposable-income figure into a presumption.
Official Form 122A-2, Chapter 7 Means Test Calculation, is completed only by above-median debtors whose Form 122A-1 routes them to a presumption analysis. The form takes the current monthly income figure produced by Form 122A-1 and subtracts a schedule of allowed deductions to produce monthly disposable income. That figure, multiplied by 60, is then tested against the statutory thresholds at 11 U.S.C. Section 707(b)(2)(A)(i).
The form's structure tracks the statute. Deductions fall into four families: (1) IRS National Standards for food, clothing, household supplies, personal care, and miscellaneous; (2) IRS Local Standards for housing and transportation, both county- or region-specific; (3) Other Necessary Expenses, a closed enumeration of categories including taxes, mandatory payroll deductions, term life insurance, court-ordered support, childcare, healthcare, telecommunications, and certain education expenses; and (4) Deductions for secured and priority debts and for a Chapter 13 administrative allowance.
The National Standards are a single combined allowance for food, clothing and services, personal care products and services, housekeeping supplies, and miscellaneous. The figure is indexed by household size only; it does not vary by geography. The IRS publishes the National Standards annually, and the means-test version is the same table the IRS uses for its own collection-financial-standards program. The amount is taken from the published table without modification; a debtor whose actual spending in these categories is higher does not receive an upward adjustment, and a debtor whose actual spending is lower does not lose any portion of the allowance.
The National Standards also include a separate out-of-pocket healthcare allowance keyed to age tier (under 65 and 65-and-over) and to household member count. The out-of-pocket healthcare allowance is in addition to amounts paid for health insurance premiums (which appear separately on the form) and to disability-related medical expenses (which may qualify as special circumstances under Section 707(b)(2)(B)).
The Local Standards address housing and transportation, the two largest expense categories for most households. Both are county- or metropolitan-area-specific. The published tables vary substantially across the country; a debtor in a high-cost coastal county receives a substantially larger housing allowance than a debtor in a low-cost interior county.
The housing allowance is split into two components: a non-mortgage/non-rent component (for utilities, maintenance, repairs, insurance, and homeowner association dues) and a mortgage-or-rent component (for the housing payment itself). The non-mortgage component is taken from the published table without modification. The mortgage-or-rent component is the lesser of the published-table figure or the debtor's actual housing payment, with one important wrinkle: any portion of a contractual mortgage payment that exceeds the published allowance does not flow through this line, but the excess may be captured separately as a secured-debt amortization on the next family of deductions.
Transportation is split into operating costs and ownership costs. Operating costs are taken from a regional table (not county-level); the figure depends on the number of vehicles the household operates, capped at two. Ownership costs are taken from a national table (a single national ownership figure per vehicle, per month); ownership costs are available for up to two vehicles, again capped at the count of vehicles the household actually owns or leases.
The Supreme Court's decision in Ransom v. FIA Card Services, N.A., 562 U.S. 61 (2011), addressed an important question about the vehicle ownership allowance in the Chapter 13 context. The Court held that a debtor who owns a vehicle free and clear of any loan or lease obligation is not entitled to claim the vehicle ownership allowance, reasoning that the allowance is for debt-related ownership costs and not for the mere fact of ownership. Although Ransom arose under the Chapter 13 disposable-income formula at Section 1325(b), the same statutory phrase ("applicable monthly expense amounts specified under the National Standards and Local Standards") appears at Section 707(b)(2)(A)(ii)(I), and most bankruptcy courts apply Ransom to the Chapter 7 means test as well. A debtor with one vehicle subject to a loan and one paid-off vehicle therefore receives ownership-cost allowance for the financed vehicle only.
This family is a closed enumeration. The categories are exhaustive; an expense not on the list is not deductible under this family regardless of how necessary the debtor considers it. The principal categories are:
An item that is necessary in the ordinary sense but does not match a category on this list does not flow through this family. Charitable contributions, recreation, personal debt service to relatives, and lifestyle preferences are not Other Necessary Expenses. A debtor who believes the omitted expense is essential must seek to characterize it as a special circumstance under Section 707(b)(2)(B), discussed below and on the companion presumption-rebuttal page.
Section 707(b)(2)(A)(iii)(I) allows a deduction of the average monthly payment on all secured debts, calculated as the total of all contractual payments scheduled to come due during the 60 months following the petition date, divided by 60. The deduction includes mortgage payments, vehicle loan payments, and any other secured-debt installments. If the debtor surrenders collateral and the secured creditor has no deficiency claim, the surrendered debt produces no future payments and contributes zero to the deduction. If the debtor reaffirms or retains and pays, the contractual payment flows through.
The interaction with the housing-allowance Local Standard is important. The Local Standard mortgage-or-rent component caps the housing-allowance contribution; the secured-debt amortization is a separate line. A debtor whose mortgage payment exceeds the Local Standard cap captures the excess as additional secured-debt amortization. The form is designed to permit this layered treatment without double-counting.
Section 707(b)(2)(A)(iv) allows the deduction of priority debt obligations divided by 60. Priority debts include domestic support obligations, certain tax claims, wage claims, and other categories enumerated at Section 507(a). The deduction reflects the statutory recognition that priority debts must be paid in full through any reorganization plan; the formula extracts a monthly equivalent.
Section 707(b)(2)(A)(ii)(III) allows the deduction of "the actual administrative expenses of administering a chapter 13 plan for the district in which the debtor resides, up to an amount of 10 percent of the projected plan payments, as determined under schedules issued by the Executive Office for United States Trustees." The EOUST publishes a national table of district-specific multipliers expressed as a percentage of projected plan payments. The allowance is available even though the debtor is filing under Chapter 7; the statutory theory is that the means test asks what the debtor could pay in Chapter 13 if forced to convert, and the administrative cost of such a plan is a necessary deduction from what would otherwise be available to creditors.
For a married debtor who files individually, Form 122A-1 includes the non-filing spouse's income in CMI, but Form 122A-2 then permits a deduction (the "marital adjustment") for any portion of the non-filing spouse's income that is not regularly contributed to household expenses. The adjustment is documented on a sub-schedule that itemizes the non-filing spouse's separate expenses. A non-filing spouse's car payment for a vehicle the debtor does not use, separate tax obligations, separate child-support payments to a prior relationship, and other separate expenses qualify.
The trustee will scrutinize marital-adjustment schedules. The deduction is among the most frequently challenged categories on Form 122A-2, in part because the boundary between "regular contribution to household expenses" and "separate expenses" is fact-intensive.
Once all deductions are subtracted from CMI, Form 122A-2 produces monthly disposable income. That figure is multiplied by 60. The presumption of abuse arises if the product is:
A 60-month disposable income below both thresholds does not produce a presumption; one above either threshold does. The bifurcated test produces three zones: a safe zone (below both), a contested middle zone (above $10,000 but below the upper threshold, where the unsecured-debt percentage matters), and an above-threshold zone (above the upper threshold).
Section 707(b)(2)(B) provides that the presumption may be rebutted by demonstrating "special circumstances, such as a serious medical condition or a call or order to active duty in the Armed Forces, to the extent such special circumstances . . . justify additional expenses or adjustments of current monthly income for which there is no reasonable alternative." The debtor must itemize each additional expense, provide documentation, attest to the accuracy of the information, and produce a re-computed disposable income below the threshold.
Form 122A-2 contains a section for itemizing special circumstances. The standard is demanding: courts have read the category narrowly. A detailed treatment of the rebuttal framework appears at the companion page on rebutting the presumption of abuse.
The IRS Standards are fixed inputs. A debtor whose actual expenditures differ from the published National or Local Standards cannot adjust the figures on the form. The form uses the published amount whether the debtor's actual spending is higher or lower. Real-world expenses appear elsewhere - in the secured-debt amortization for housing payments above the Local Standard cap, or in special circumstances itemization for healthcare expenses beyond the National Standards allowance.
Form 122A-2 is the principal document examined by the trustee in any above-median Chapter 7 case. The form requires the debtor to certify the inputs under penalty of perjury. Standard trustee inquiries focus on: (a) misclassification of a secured debt as a discretionary debt or vice versa; (b) double-counting of housing payments through both the Local Standard and the secured-debt amortization; (c) claims of vehicle ownership allowance for paid-off vehicles, foreclosed by Ransom; (d) inflated marital-adjustment schedules; and (e) inadequate documentation of Other Necessary Expense entries, particularly healthcare and childcare.
A debtor who fails the means test by a substantial margin on Form 122A-2 has limited options: rebut under Section 707(b)(2)(B) special circumstances, convert to Chapter 13, or face dismissal. A debtor who fails by a narrow margin should examine each deduction line for possible additional support and the marital adjustment for additional separate-expense documentation.
This page provides general information about Official Form 122A-2 and the Section 707(b)(2) deduction schedule. It does not constitute legal advice. The application of the IRS Standards, marital adjustment, and special-circumstances framework to a particular debtor depends on facts and on district practice that should be evaluated by qualified counsel.
Last modified: 2026-05-22