Chapter 7 Income Limits 2024: Why Most People Get It Wrong

You’re sitting at your kitchen table, staring at a mountain of credit card statements and medical bills that just won't stop growing. You’ve heard Chapter 7 bankruptcy can basically wipe the slate clean, but then you hear about the "income limits" and panic sets in. You think you make too much. You think you're stuck.

Honestly, the Chapter 7 income limits 2024 are way more flexible than most people realize. It’s not just a single "line in the sand" where if you make a dollar more, you're out. It’s a multi-layered calculation that actually accounts for the reality of your life—like how much it costs to put gas in your car or keep the lights on in a state like California versus a state like Mississippi.

Let’s break down how this actually works in the real world.

The First Hurdle: The Median Income Test

The very first thing the court looks at is your "Current Monthly Income." But don't let the name fool you. It’s actually an average of everything you earned over the six full months before you file. If you file in November, they’re looking at May through October.

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The law compares this average to the median family income for your specific state and household size. These numbers aren't random; they’re updated twice a year by the Department of Justice (usually in April/May and November).

For example, if you were filing in late 2024, the numbers looked something like this:

• In California, a single-person household had a median limit around $74,007.
• In Texas, that same single person was looking at roughly $63,448.
• In Florida, it hovered around $65,801.

If your income is below that number? You pass. Simple as that. You don't even have to do the rest of the complicated math.

What Happens if You're "Over the Limit"?

This is where people usually give up, and it’s a huge mistake. Being over the median doesn't mean you can't file Chapter 7. It just means you have to take the "Means Test."

Think of the Means Test as a way to show the court that even though you make "good" money on paper, your necessary expenses eat it all up. You aren't being greedy; you're just broke at a higher income level. The court uses a mix of your actual expenses (like your mortgage or car payment) and IRS National Standards (what the government thinks food and clothing should cost for a family of your size).

The Math of Disposable Income

Basically, you take your gross income and start hacking away at it with allowed deductions:

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1. Standard Deductions: Fixed amounts for food, clothing, and out-of-pocket healthcare.
2. Housing and Utilities: A mix of what you actually pay and local caps.
3. Transportation: Operating costs for your car and the actual loan payment.
4. Taxes and Insurance: Mandatory payroll taxes, health insurance, and life insurance.
5. Special Circumstances: This is the "wildcard" category. If you have a child with special needs or you're caring for an elderly parent, those costs can often be deducted.

If, after all that math, your "disposable income" is low enough, you still qualify for Chapter 7. We’re talking about having less than roughly $160 to $250 left over each month to pay back unsecured creditors. If you're at that level, the court figures there’s no point in forcing you into a five-year Chapter 13 repayment plan because there’s nothing to repay.

The Timing Trap

Timing is everything. Since the test looks back at the last six months, a one-time bonus or a few weeks of heavy overtime can accidentally push you over the limit.

I’ve seen people wait just one or two months to file specifically so that a high-income month "falls off" the back of the six-month window. It’s perfectly legal, and it’s often the difference between a total debt discharge and a 60-month payment plan.

Real World Nuance: Not All Income Counts

Here’s a kicker: Social Security income is generally excluded. If you’re a retiree or on SSDI, that money usually doesn't count toward the Chapter 7 income limits 2024. You could be receiving $3,000 a month in Social Security and $2,000 from a part-time job; for the means test, the court might only "see" the $2,000.

Also, if more than half of your debt comes from a failed business, you might be exempt from the means test entirely. This is a massive loophole for former entrepreneurs who are drowning in personally guaranteed business loans.

Actionable Steps to Take Right Now

Don't just guess based on a Google search. The numbers change, and the math is notoriously "picky."

• Gather your paystubs: You need exactly six months of income records. Don't forget side gigs like Uber or Etsy sales.
• Check the U.S. Trustee website: Look for the "Median Income Tables" specifically for cases filed after November 1, 2024. That’s the most current data for the tail end of the year.
• List your "Non-Standard" expenses: Start documenting things like childcare, mandatory retirement contributions, and union dues. These are "above-the-line" deductions that can save your eligibility.
• Consult a local pro: Bankruptcy is federal, but the local standards for rent and utilities vary by county. A local attorney will know exactly what the trustees in your district find "reasonable."

The reality is that the vast majority of people who need to file Chapter 7 actually qualify. The "limit" is more of a filter than a wall. If you’re struggling, the math is usually on your side.

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Next Step: Review your last six months of gross paystubs and compare the average to your state's median income for your household size to see if you automatically qualify or need to dive into the expense deductions.