Bankruptcy is not available to everyone automatically. Before a court will grant a Chapter 7 discharge or approve a Chapter 13 repayment plan, you must meet specific legal requirements — including passing the bankruptcy means test, completing mandatory credit counseling, and demonstrating that your financial situation genuinely warrants the protections bankruptcy provides. In 2026, with record U.S. household debt at $18.8 trillion and delinquency rates at their highest since before the 2008 financial crisis, more Americans are asking whether they qualify. Here is exactly what the law requires.
General Requirements for Both Chapter 7 and Chapter 13
- Completion of an approved credit counseling course within 180 days before filing — this is a federal mandate, not optional
- Filing a bankruptcy petition with the court, including complete schedules of assets, liabilities, income, and expenses
- Payment of filing fees — $338 for Chapter 7, $313 for Chapter 13 as of 2026 (fee waivers available in some circumstances)
- Full disclosure of all debts, assets, income sources, and financial transactions in the prior 2 years — bankruptcy fraud is a federal crime
- No previous Chapter 7 discharge within the past 8 years, or Chapter 13 discharge within the past 4 years
The Bankruptcy Means Test — Chapter 7 Eligibility
Part 1 — Income Comparison
Compare your average monthly income over the past 6 months to your state’s median income for a household of your size. If your income is below the state median, you automatically pass the means test and can file Chapter 7. If it is above the median, you proceed to Part 2. State median income figures are updated periodically by the U.S. Trustee Program and vary significantly by state.
Part 2 — Disposable Income Calculation
If your income exceeds your state’s median, you subtract allowed expenses — defined by IRS National Standards, Local Standards, and certain actual expenses — from your monthly income to calculate monthly disposable income. If your disposable income falls below a threshold that would allow meaningful repayment to unsecured creditors, you pass the means test. If it is above the threshold, you may be required to file Chapter 13 instead.
Chapter 13 Requirements — Who Can File
- You must have regular income — salary, self-employment income, or other reliable sources — sufficient to fund a 3 to 5-year repayment plan
- Your unsecured debts must be below $2,750,000 (this figure is periodically adjusted)
- You must not have had a bankruptcy case dismissed for cause within the past 180 days
- You must submit a proposed repayment plan that creditors and the court can review and approve
What Happens If You Do Not Qualify for Bankruptcy
Failing the means test for Chapter 7 does not necessarily mean Chapter 13 is unavailable — but a court-supervised 3 to 5-year repayment plan may be your only bankruptcy option. For many people, this makes private debt relief alternatives more attractive.
United Debt Relief’s done-for-you Debt Settlement program works specifically for people with $10,000 or more in unsecured debt — regardless of whether they would pass a bankruptcy means test. Rather than navigating a federal court process, certified debt negotiators and attorneys in our network negotiate directly with each creditor to reduce the total balance owed, often by 40 to 50% before fees.
For people with good credit who simply carry too much high-rate debt, a Debt Consolidation Loan from our nationwide network of vetted lending partners may be the more straightforward solution — replacing multiple credit card balances with one fixed monthly payment at a meaningfully lower interest rate.
Frequently Asked Questions — Qualifying for Bankruptcy
Q: What income level is too high for Chapter 7 bankruptcy?
There is no single national income threshold — it depends on your state’s median income for your household size. Many people above the median still qualify for Chapter 7 after allowable expense deductions are applied. Always verify current state median figures through the U.S. Trustee Program before filing.
Q: Do I need an attorney to file for bankruptcy?
You can technically file pro se (without an attorney), but bankruptcy involves complex legal filings and serious long-term consequences. Errors in your petition — including incomplete disclosure of assets or income — can result in dismissal or fraud charges. Most bankruptcy practitioners strongly recommend professional legal representation.
Q: How does credit counseling before bankruptcy work?
You must complete a credit counseling course from a U.S. Trustee-approved provider within 180 days of filing. The course typically takes 1 to 2 hours and covers your financial situation, available options including bankruptcy alternatives, and a budget analysis. A certificate of completion is required before your petition can be filed.
Not sure if bankruptcy is right for you? Call United Debt Relief at 1 (888) 802-2092 for a free consultation. We review your debt, income, and options. All 50 states. No upfront fees.