When individuals in Massachusetts find themselves overwhelmed by debt, bankruptcy can offer a chance to reset their financial lives. But before anyone can file for Chapter 7 bankruptcy, the type that eliminates most unsecured debts – they must pass something called the means test.
Whether you can afford to pay your debt or not will determine the type of bankruptcy you need to file.
If you have enough funds to repay some of your debts, then a Chapter 13 repayment plan is what you need. Understanding how the means test works and how Massachusetts’ income levels and exemptions apply is essential before taking the next step toward debt relief.
Understanding the Purpose of the Means Test
The means test was created as part of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005. Its goal is to ensure that only those who cannot afford to repay debts qualify for Chapter 7 bankruptcy. It helps identify those better suited for Chapter 13.
The test compares your income to the median household income for Massachusetts, adjusted for your family size. If your income is less than the state median, you automatically qualify for Chapter 7 bankruptcy. If it’s more than this, you’ll need to complete the second part of the test, which looks more closely at your expenses and disposable income.
Step One: Comparing Your Income to the Massachusetts Median
The first step of the means test focuses on your average monthly income for the six months prior to filing. This includes all regular sources of income – wages, bonuses, rental income, and business revenue. Certain benefits, such as Social Security payments, are excluded.
That income figure is then annualized and compared to the Massachusetts median for your household size. The U.S. Trustee Program updates these figures regularly, reflecting changes in living costs. For example, in 2025, the Massachusetts median income for a single filer may be around $84,000, while for a household of four it could exceed $130,000.
If your household income is below these limits, the test ends here – you pass, and you can typically file for Chapter 7 bankruptcy without further analysis.
However, if your income is above the median, you must continue to the next step.
Step Two: Calculating Disposable Income
The second part of the means test determines how much of your income is left after subtracting specific allowed expenses. These expenses are defined can include:
● Housing and utilities – Based on average Massachusetts housing costs by county
● Transportation – Including car ownership and operating expenses
● Food, clothing, and household supplies – Based on IRS national standards
● Taxes, health insurance, and child care – Actual and necessary costs may be deducted
● Secured debt payments – Such as car loans or mortgage payments
After applying these deductions, what remains is your “disposable income.” If that amount is too high, meaning you could reasonably pay a portion of your debts over time, the court may require you to file under Chapter 13 instead of Chapter 7.
Massachusetts-Specific Considerations
While the federal means test provides the general framework, Massachusetts-specific data influences many of the figures used during the calculation. The state has a high cost of living, so the allowable expenses, especially for housing and transportation, are often higher than in other parts of the country.
Massachusetts law offers exemptions that protect your property and assets, even if you file for Chapter 7. These don’t affect the means test directly. However, they can influence your overall bankruptcy strategy.
It also provides exemptions for vehicles, personal property, retirement accounts, and tools of the trade. Knowing these exemptions allows your attorney to determine what assets you can keep while seeking debt relief.
Another advantage for Massachusetts residents is the option to choose between the federal exemption system or the state exemption system – whichever offers greater protection in your situation.
Common Misunderstandings About the Means Test
Many people assume that earning a high income automatically disqualifies them from Chapter 7 bankruptcy. This isn’t always true. Because the means test considers your actual expenses, someone with a high salary but equally high living costs – such as a large mortgage, medical expenses, or family obligations, may still qualify.
Preparing for the Means Test
Accurate documentation is key to successfully completing the means test. You’ll need to gather:
● Pay stubs or proof of income for the past six months
● Records of expenses such as rent, utilities, and insurance
● Information about secured debts and ongoing payments
● Details on family size and dependents
Because the calculations can be complex, most people rely on a bankruptcy attorney to ensure the test is done correctly. An experienced attorney will evaluate your full financial situation, determine which chapter of bankruptcy best fits your needs, and make sure all paperwork is filed accurately and on time.
When Debt Feels Unmanageable, There Is a Way Forward
Hines Law is a Bankruptcy Firm serving the greater Boston area that gives honest debtors a chance to rebuild – and passing the means test ensures that opportunity is fair for everyone.
For personalized guidance through the means test and every stage of the bankruptcy process, contact one of our bankruptcy law firm locations and speak to a bankruptcy attorney, free. We’ll explain how state-specific exemptions can help preserve your assets, and ensure that your filing sets you on the path to lasting financial recovery.