One of the first questions almost everyone asks is, "Do I even qualify for Chapter 7?" The answer usually begins with the median income test — a comparison of your household income to the median income for a household of your size in Pennsylvania. It sounds intimidating, but it is more straightforward than most people expect, and many who assume they earn too much actually pass.

What the Median Income Test Does

The median income test is the first part of what's commonly called the "means test." It compares your average household income over the six months before filing against the published median income for your household size in your state. If your income is below the Pennsylvania median, you pass automatically and qualify for Chapter 7. If you are above it, you move to a second, more detailed calculation — but being above the median does not, by itself, disqualify you.

How Income Is Calculated

The test uses your average gross income over the six full calendar months before filing, multiplied to an annual figure. Important details:

  • Most sources of income count — wages, salary, business income, rental income, and more.
  • Social Security benefits are generally excluded from the calculation, which is a significant help for retirees.
  • Household size matters — the median figure rises with each additional member of your household, so an accurate household count is essential.
  • Timing can change the result — because it's a six-month lookback, a recent change in income (a layoff, a bonus) can move you above or below the line depending on when you file.

If You Are Above the Median

Being above the median triggers the second stage of the means test, which subtracts allowed living expenses — housing, transportation, food, healthcare, taxes, and certain other costs — from your income. If little or no "disposable income" remains after these allowed expenses, you can still qualify for Chapter 7. This is why so many higher earners are surprised to learn they pass: their real expenses absorb most of their income.

What If You Don't Qualify for Chapter 7?

If the full means test shows you have meaningful disposable income, Chapter 7 may not be available — but Chapter 13 is. In Chapter 13, you repay a portion of your debt through a three-to-five-year plan based on what you can actually afford, and the remaining qualifying debt is discharged at the end. Either way, relief is available.

Don't disqualify yourself before we talk. Roughly speaking, a large share of people who walk in convinced they "make too much" for Chapter 7 actually pass once we run the numbers correctly.

The Bottom Line

The median income test is the gateway to Chapter 7: pass it, and you qualify outright; come in above it, and the means test takes a closer look at your real expenses before deciding. Because income calculation, household size, and timing all affect the outcome, the test is best run with an experienced attorney — who can also identify whether filing sooner or later produces a better result.