Chapter 13 bankruptcy income limits: median rules

You pass the Chapter 13 median test if your household's current monthly income (CMI) is at or below the median income for your state and household size. If you pass, your repayment plan runs for three years. If you don't, you must propose a five-year plan, and your disposable income calculation becomes much stricter.

CMI is not your actual take-home pay. It's based on the average monthly income you received from almost all sources during the six full calendar months before filing, multiplied by 12 to get an annual figure. That annual number is what you compare to the state median. Because the test uses this mechanical six-month lookback, you can sometimes pass even if you earn more now, as long as your recent average is low enough. The next section shows you exactly where to find the state figures you need to make this comparison.

To find your state median income for a Chapter 13 filing, go directly to the U.S. Trustee Program's Means Testing page, which publishes the official figures updated periodically. These are the same numbers your trustee and the court will use, so accuracy matters.

Here is the reliable lookup process:

1. Go to the source. The U.S. Trustee Program's website maintains the current state-by-state tables. Search for 'U.S. Trustee Means Testing' to land on the correct page.
2. Select the right data set. Census Bureau median income figures apply for cases filed on or after the most recent adjustment date, usually updated twice a year. Use the table that matches your filing date.
3. Find your state and household size. The table lists every state plus Washington D.C. and territories. Scroll to your state, then move across the row to the column matching your household size, which includes people you support financially even if they do not live with you.
4. Multiply for your annual limit. The table shows annual gross income. Your Chapter 13 plan uses your 'current monthly income' (CMI) averaged over the six full months before filing, so you will later convert the annual cap to a monthly number and compare it to your CMI average.

Do not rely on a random blog or outdated PDF. Using stale data can lead you to misjudge your eligibility. If the U.S. Trustee site feels hard to navigate, a local bankruptcy attorney can confirm the exact current figure for your case date in minutes.

Your household size determines which median income figure you compare your income against, and a larger household nearly always qualifies for a higher limit. The U.S. Trustee Program publishes separate median income tables for each state, with columns that increase as the number of people in your home goes up.

For instance, if you are a single earner in a state where the 1-person median is $60,000, your current monthly income must be at or below that figure to automatically pass the means test for Chapter 13. Add a spouse and child to the household, and the applicable median might jump to $85,000 or more, potentially pulling the same income safely under the cap. You count yourself, your spouse, any dependents, and any other people who live with you and share financial responsibilities, even if they are not family. Since the difference of one person can move you from above to below the median, it is worth verifying your full household count before assuming you do not qualify.

For Chapter 13, income means practically any money you received in the last six months, averaged into what the court calls your 'current monthly income' (CMI). This is a backward-looking calculation, not a prediction of future earnings. The main exception is Social Security benefits, which are entirely excluded by law from both CMI and the disposable income calculation for your plan.

Here are the income types that count toward your CMI:

• Wages, salary, and commissions from your main job.
• Overtime, bonuses, and tips, even if the amounts vary each month.
• Self-employment and gig work income (what you earn after common business expenses).
• Rental property income, minus operating costs.
• Regular contributions from a family member or partner who helps with household expenses, even if they aren't filing with you.
• Unemployment benefits and regular pension or retirement distributions.
• Alimony and child support payments you receive on a consistent basis.

The key practical test is whether the money is regular and available to pay your living expenses. A one-time gift from a relative would not count, but a recurring monthly transfer into your account likely does. Correct classification matters because inflating your CMI can mistakenly make it look like you fail the median test when you do not.

Overtime, bonuses, and gig work all count as current monthly income (CMI), but only the portion you actually received during the six calendar months before filing matters. The court averages these amounts just like your base pay, which can push you over your state's median income threshold even if your base salary alone falls below it.

That includes:

• Overtime pay: Any overtime you earned and were paid in the six-month lookback window is included, even if you can show the extra hours have now stopped.
• Bonuses: Holiday bonuses, performance awards, or profit-sharing paid to you within those six months are part of the calculation, regardless of whether you expect another one.
• Gig work: All income from rideshare, delivery, freelance projects, or seasonal side work counts during the months you received it. Courts use your total deposits over the lookback period, not a projection of future gig earnings.

If a single large bonus, a seasonal gig rush, or a stretch of heavy overtime spikes your six-month average above the median, you can still qualify for Chapter 13. Your attorney will typically discuss whether waiting a few months to file allows that spike to fall outside the six-month window, which lowers your CMI and may help you pass the median test.

Being over the median does not disqualify you from Chapter 13, but it does lock you into a five-year repayment plan instead of three. Your disposable income must go toward the plan for the full 60 months, which often means a higher total payout to unsecured creditors.

The court calculates your plan payment by subtracting allowed living expenses from your current monthly income (CMI), using IRS standards for many categories. A longer plan gives the trustee more time to capture any excess income, so your non-priority debts (like credit cards) may need to be repaid in full or at a higher percentage than a below-median filer would pay. The next section covers specific strategies high-income filers use to still pass the required budget test.

Even when your current monthly income (CMI) is above the median for your state, you can still qualify for Chapter 13. The means test focuses on the disposable income left after subtracting allowed expenses, not your gross earnings. Here are five common paths to qualification.

1. Maximize allowed expenses on the means test

Some expenses are set by IRS local standards, not your actual spending. This often works in your favor, especially for housing, transportation, and food. You must accurately list your real costs, but the standards can absorb a substantial portion of your income and reduce your disposable income calculation.

2. Deduct secured debt payments in full

Your mortgage, car payment, and other secured loan payments are deducted on the means test. If a large share of your high income goes to these debts each month, your calculated disposable income drops significantly. This alone can push your filing within the qualifying range.

3. Account for priority debts

Priority debts, like recent tax obligations and past-due child support, are deducted when calculating your plan payment. If you have a large tax debt from a solid earning year, deducting that mandatory repayment can absorb the income that would otherwise make it look like you have enough money to pay unsecured creditors.

4. Include ongoing business and operating expenses

If you are self-employed or a gig worker, your gross receipts are not your income. You deduct legitimate, ordinary business expenses first. High operating costs can dramatically lower your CMI, bringing a successful business owner well below the median income threshold.

5. Propose a 100% repayment plan

There is no statutory income cap for Chapter 13. If your disposable income calculation still shows you can afford it, you can file by proposing a plan that pays all unsecured creditors in full. The court is primarily concerned that you pay what the means test says you can afford over three to five years, even if that means repaying 100% of what you owe.

A recent job change can directly affect your Chapter 13 filing because your "current monthly income" (CMI) is based on a six-month average. A sudden drop or spike in pay might not be fully reflected yet, which can complicate which income number the court uses when deciding if you pass the median test.

A job loss or reduction in hours can lower your actual take-home pay immediately. But because CMI averages the last six months, your official income on paper may still look higher than what you actually earn today. That can make it harder to qualify even if you cannot currently afford to pay your debts. In this situation, you may need to explain the change to the court using pay stubs or a termination letter so your filing reflects your real financial picture.

A new job with higher pay creates the opposite problem. If your income recently jumped above your state's median income, the six-month average might still show a lower number, potentially letting you qualify for Chapter 13 now. However, the court also looks at your projected future income, so a recent raise could still affect your repayment plan's feasibility, especially if the trustee argues you can afford a higher monthly payment.

If your income drops after filing, you can ask the court to modify your Chapter 13 plan payments. You are not locked into the original payment amount if your financial situation genuinely worsens through no fault of your own. The key is acting quickly and notifying your attorney before you miss a payment.

Most courts allow a formal request, called a motion to modify, to lower your plan payments based on a sustained income reduction. A temporary dip usually won't qualify, but a permanent layoff, a reduction in hours, or a medical issue that lowers your current monthly income (CMI) generally will. Your plan payment can even be reduced to zero for a period if you are eligible for a hardship discharge later, though that is a separate, more complex process.

The trustee and judge will typically look at a few things when reviewing your request:

• Documentation: You must show pay stubs, a termination letter, or medical records proving the drop is real and involuntary.
• Good faith: Quitting a job to avoid payments will get your modification denied. The reduction must be beyond your control.
• Feasibility: You still need to show enough income to cover priority debts and keep any secured assets you want to retain, like a home or car. If you can't afford to keep the asset at all, the plan structure might shift.

The biggest practical risk is waiting. If your income drops and you simply stop paying without court approval, your case can be dismissed, which removes all bankruptcy protection. Contact your attorney the moment you know the income loss is lasting so they can file the modification before you default.