DAY 9 — What Income Disqualifies You from Chapter 7 Bankruptcy?
Week: Week 2: Decision
Intent: High-Intent | Chapter 7 Income Limits
High income doesn't automatically disqualify you from Chapter 7. Learn exactly how Maryland's means test works and what income level triggers Chapter 13 instead.
No fixed income number automatically disqualifies you from Chapter 7. If your income exceeds Maryland's median for your household size, you take the means test. Only if you have significant 'disposable income' after allowed expenses will you be directed toward Chapter 13 instead.
How the Means Test Works
The means test isn't just about gross income — it's about disposable income after standardized and actual allowed deductions. These include housing, food, transportation, healthcare, childcare, and secured debt payments.
Many people earning above the median still pass the means test because their actual living expenses leave little true surplus income.
If You Fail the Means Test
Failing the means test doesn't mean you have no options — it means Chapter 7 may not be available and Chapter 13 may be your bankruptcy path. Chapter 13 lets you repay debts over 3–5 years while keeping your assets and stopping all collection action.
Income That IS Counted
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Wages, salary, tips, overtime
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Business income (self-employment)
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Rental income
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Pension and retirement income
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Regular contributions from others to household expenses
Income That Is NOT Counted
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Social Security benefits (excluded from means test income)
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Payments to victims of war crimes or terrorism
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Some disability payments
This exclusion of Social Security is significant for retirees or disabled individuals — even those with moderate SS income often qualify easily.
Maryland-Specific Insight
Maryland's cost of living is high, especially near Baltimore and Washington D.C. The means test's standardized expense allowances are tied to geographic data — Maryland residents often receive higher allowances, making it easier to qualify even with moderate-to-high income.
Reality Check
'I make too much to file bankruptcy' is one of the most common misconceptions we hear. The means test is designed to measure the ability to repay, not just income. Many professionals, dual-income households, and business owners with high gross income still qualify for Chapter 7.
Related Questions
→ Do I Qualify for Chapter 7 Bankruptcy?
→ Is Chapter 13 Better Than Chapter 7 for My Situation?
→ Can I File Bankruptcy If I'm Unemployed?
→ Can I File Chapter 7 If I Receive VA Benefits?
