Chapter 7 Bankruptcy Income Limits in California: Means Test Rules

California’s Chapter 7 bankruptcy income limits come from Census Bureau median family income data, and they run higher than most states. For cases filed on or after April 1, 2026, a single filer can earn up to $79,253 a year and qualify automatically; a four-person household’s cutoff is $139,071.¹ Earning more doesn’t disqualify you. It just sends you to a longer test that accounts for your actual expenses.

California’s Current Median Income Thresholds

The first step is comparing your household income to California’s median for your household size. The U.S. Trustee updates these figures twice a year, in April and November. For cases filed on or after April 1, 2026:

1 person: $79,253
2 people: $102,797
3 people: $116,541
4 people: $139,071
Each additional person beyond 4: add $11,100

These sit well above the national medians.¹ If your income is below the threshold for your household size, you pass the means test automatically. This is sometimes called the “safe harbor”: no itemized expenses, no longer calculation form. If your income is above the line, you move to the full means test, which is more involved but still passable for many filers.

Household size counts everyone who lives with you and shares income or expenses, including children and a non-filing spouse. A larger household raises the threshold in your favor. Cases filed between November 1, 2025, and March 31, 2026, used slightly lower figures: $77,221 for one person and $135,505 for a family of four.² If you’re close to the line, the timing of your filing around an update period can matter.

How Your Income Is Calculated

The number you compare to the median isn’t your current paycheck or your last tax return. Federal law defines “current monthly income” as the average of everything you received during the six full calendar months before you file.³ File on July 15 and the lookback runs January 1 through June 30. Add up what you received, divide by six for the monthly average, multiply by twelve for an annual figure, and compare that to California’s median.

Almost everything counts: wages, salary, tips, bonuses, business income, rental income, interest, dividends, and regular financial contributions from household members who aren’t filing with you. The main exception is Social Security benefits, which the statute explicitly excludes.³ Unemployment compensation is less clear; the official form treats it as income unless you argue it qualifies as a Social Security Act benefit.⁴ Veterans’ disability compensation and certain military payments are also excluded.

The six-month lookback creates a timing strategy. If part of that window includes high-earning months from a job you no longer have, waiting a few months to file pushes those months out of the calculation and replaces them with lower-income ones. Filers who recently lost a job or took a pay cut often benefit from a short delay.

If You’re Married and Filing Alone

Your spouse’s income gets added to the household total for the initial median comparison, even if you’re filing solo. That alone can push you over the line. The marital adjustment on Form 122A-1 lets you subtract the portion of your spouse’s income that pays for their own separate expenses rather than shared household costs: individual credit card payments, student loans, or support obligations from a prior relationship. You’ll need bank statements or receipts to back up the deduction.

Who Skips the Means Test Entirely

Several categories of filers bypass the means test no matter what their income looks like.

Below-median filers are already done. If your annualized current monthly income falls below California’s median for your household size, you’ve passed.

Primarily non-consumer debt is a major exemption. The means test only applies when your debts are “primarily” consumer debts: credit cards, medical bills, car loans, and similar personal obligations. If more than half of your total debt comes from business losses, tax obligations, investment liabilities, or other non-consumer sources, you file Form 122A-1Supp to claim exemption from the means test.⁵ This is how many self-employed filers and former business owners reach Chapter 7 even with higher incomes.

Disabled veterans whose debts were incurred primarily during a period of active duty or homeland defense activity cannot have their case dismissed or converted based on means testing.⁶

Reservists and National Guard members who served on active duty or performed homeland defense activity for at least 90 days after September 11, 2001, are exempt from the means test during their service and for 540 days after release.⁶

Over the Median: Passing the Full Means Test

If your income is above California’s median and none of the exemptions apply, you complete Form 122A-2. The form subtracts allowed expenses from your income to decide whether you have enough disposable income left to repay creditors. Most above-median California filers who complete this form still pass.

How Expense Deductions Work

Form 122A-2 doesn’t let you claim whatever you actually spend. Basic living costs — food, clothing, personal care, out-of-pocket healthcare — use IRS National Standards set by household size and applied uniformly across the country. You get those amounts regardless of your actual spending. Housing and transportation use IRS Local Standards, which vary by county. For Californians, that’s a real advantage: Los Angeles, San Francisco, San Diego, and other high-cost counties produce substantially larger allowed deductions than most of the country.⁷

Beyond standardized categories, you can deduct actual expenses for mandatory payroll taxes, union dues, childcare, health insurance premiums, disability insurance, and health savings account contributions. Payments on secured debts like your mortgage or car loan are deductible based on the total due over the next 60 months divided by 60.⁶ Charitable contributions and education expenses for children with special needs are also deductible.

The Disposable Income Thresholds

After deductions, the form multiplies your remaining monthly income by 60 (a hypothetical five-year repayment plan). That number decides whether a “presumption of abuse” arises, meaning the court presumes you belong in Chapter 13 instead. As of April 2025, the presumption kicks in if the 60-month figure equals or exceeds the lesser of:

25% of your total nonpriority unsecured debt, or $10,275, whichever is greater; or
$17,150

In practical terms: if your leftover monthly income after deductions is roughly $171 or less, you’re clear no matter how much unsecured debt you have. Above roughly $286 a month, the presumption of abuse applies. In between, the outcome depends on your total unsecured debt.⁶

Rebutting the Presumption

Even when the math triggers the presumption, you can still qualify by showing “special circumstances” that justify additional expenses or income adjustments beyond the standard deductions. The statute names a serious medical condition and a call to active military duty as examples. You itemize each extra expense, document it, and explain under oath why it’s necessary and has no reasonable alternative.⁶ If those extra expenses pull your 60-month disposable figure below the thresholds, the presumption is rebutted and you remain eligible.

What Happens If You Don’t Qualify

Failing the means test doesn’t close bankruptcy off; it closes off Chapter 7. The court can dismiss your case or, with your consent, convert it to Chapter 13, which involves a three-to-five-year repayment plan instead of a quick discharge of unsecured debts.⁶ Chapter 13 can be useful if you need to catch up on mortgage arrears or car payments, but it requires steady income and years of court-supervised payments.

If you’re close to the line, the timing strategies above and careful attention to every allowed deduction can decide the result. Small adjustments to which deductions get claimed, or when you file, often swing an outcome that looks fixed on paper.

1
U.S. Trustee Program. Census Bureau Median Family Income By Family Size
2
U.S. Trustee Program. Census Bureau Median Family Income By Family Size
3
Office of the Law Revision Counsel. 11 USC 101 – Definitions
4
United States Courts. Official Form 122A-1 Chapter 7 Statement of Your Current Monthly Income
5
United States Courts. Statement of Exemption from Presumption of Abuse Under 707(b)(2)
6
Office of the Law Revision Counsel. 11 USC 707 – Dismissal of a Case or Conversion to a Case Under Chapter 11 or 13
7
United States Department of Justice. Means Testing