To qualify for Chapter 7 bankruptcy in California without further scrutiny, your household income must fall below the state median for your family size. For cases filed on or after April 1, 2026, the Chapter 7 income limits in California start at $79,253 for a single filer and rise to $139,071 for a family of four. Earning above the median doesn’t shut the door: you can still qualify by passing the means test, which subtracts allowed expenses from your income to check whether you have enough left over to repay creditors.
California Median Income Figures for 2026
The U.S. Trustee Program sets these thresholds from Census Bureau data and updates them periodically. For Chapter 7 cases filed on or after April 1, 2026, the numbers in California are:
- 1 person: $79,253
- 2 people: $102,797
- 3 people: $116,541
- 4 people: $139,071
- Each additional person beyond four: add $11,100
California’s figures sit well above the national median, reflecting the state’s higher cost of living. The court counts everyone in the household who contributes to or relies on shared financial resources when picking which threshold applies. If your annualized income lands under the applicable number, you pass the initial screening and the case moves ahead without a full means test.1U.S. Trustee Program. Census Bureau Median Family Income By Family Size
How Your Income Gets Calculated
“Current monthly income” in bankruptcy isn’t last month’s paycheck. It’s the average of everything you received during the six full calendar months ending on the last day of the month before you file. File in August 2026 and the court looks at February through July 2026. Multiply the monthly average by 12 to get the annualized figure that gets compared to the California median.
The calculation sweeps in wages, salary, commissions, business profits, rental income, dividends, interest, and money anyone else regularly contributes toward household expenses. Social Security benefits are excluded outright under 11 U.S.C. ยง 101(10A)(B). That exclusion is categorical, so even substantial Social Security payments won’t push you over the line.
Why Timing the Filing Matters
Because the lookback covers six specific months, when you file changes the math. A bonus, stretch of overtime, or short-term job several months back can inflate your average. Waiting until those high-earning months roll out of the six-month window can drop your calculated income below the median. For filers hovering near the cutoff, this is often the most useful lever available.
When Your Spouse’s Income Counts
If you’re married and living with your spouse, their income goes into the calculation even if you’re filing alone. Many people assume that filing individually means only their own earnings matter. It doesn’t.
The offset is a “marital adjustment” on Form 122A-2. You can subtract the portion of your spouse’s income that doesn’t go toward shared household expenses: their student loan payments, support obligations to another household, tax withholding on their separate income, and debts in their name only.2United States Courts. Chapter 7 Means Test Calculation – Form 122A-2
If you and your spouse are legally separated or not living together, you generally don’t include their income at all. Only amounts they regularly contribute toward your household or your dependents count.
If You Earn Above the Median: The Means Test
Filers over the California median must complete Form 122A-2, the Chapter 7 Means Test Calculation. The form asks whether you have enough disposable income, after allowed deductions, to fund a meaningful repayment plan over five years. Passing doesn’t require low income. It requires showing that once necessary expenses come out, there isn’t enough left to matter.3United States Department of Justice. Means Testing
What You Can Deduct
Most deductions use standardized IRS amounts rather than what you actually spend. IRS National Standards cover food, clothing, personal care, and out-of-pocket health costs. IRS Local Standards cover housing, utilities, and transportation, set by the specific California county where you live. You get these amounts regardless of your real spending.4Office of the Law Revision Counsel. 11 USC 707 – Dismissal of a Case or Conversion to a Case Under Chapter 11 or 13
On top of the IRS standards, you can also deduct:
- Actual monthly payments on secured debts like your mortgage and car loan, averaged over the 60 months after filing
- Income tax, self-employment tax, Social Security, and Medicare withholding
- Health insurance, disability insurance, HSA contributions, and your own term life insurance premiums
- Court-ordered child support, alimony, and similar obligations
- Up to $1,500 per month for each dependent child under 18 for childcare and related expenses
- Costs incurred to protect your family from domestic violence
These often decide the outcome for California filers. High housing costs and secured debt payments can eat most of a paycheck that looks generous on paper.2United States Courts. Chapter 7 Means Test Calculation – Form 122A-2
The Numbers That Decide It
After deductions, you’re left with a monthly disposable income. Multiply by 60. Where that total lands determines what happens:
- Below $10,275: no presumption of abuse, and you qualify for Chapter 7.
- $17,150 or higher: the presumption of abuse applies. You either rebut it or take another route.
- Between $10,275 and $17,150: abuse is presumed only if that amount would cover at least 25% of your nonpriority unsecured debts.
The Judicial Conference adjusted these thresholds effective April 1, 2025, and they carry through 2026 filings.4Office of the Law Revision Counsel. 11 USC 707 – Dismissal of a Case or Conversion to a Case Under Chapter 11 or 13
Triggering the presumption doesn’t end the case. You can show “special circumstances” that justify additional expenses or income adjustments with no reasonable alternative. The statute names a serious medical condition and a call to active military duty as examples, but the category is broader. The catch is documentation: each additional expense must be itemized, backed by records, and sworn to, and the adjusted numbers must bring 60-month disposable income under the threshold.
Filers Who Skip the Means Test Entirely
Some California filers bypass the means test no matter what they earn. These carve-outs are narrower than people expect but absolute when they apply.
Disabled Veterans
If you’re a disabled veteran and your debts were primarily incurred during active duty or while performing homeland defense activity, the means test doesn’t apply. The statute bars the court from dismissing or converting your case on any means-testing ground. No income cap, no disposable income math, no presumption analysis.4Office of the Law Revision Counsel. 11 USC 707 – Dismissal of a Case or Conversion to a Case Under Chapter 11 or 13
National Guard and Reservists
Guard members and reservists called to active duty or homeland defense activity for at least 90 days after September 11, 2001, are exempt from the means test during service and for 540 days after it ends. The debts don’t need to be service-related. The exemption is tied to the service, not the obligations.
Primarily Business Debt
The means test only applies when your debts are primarily consumer debts. If more than half your total debt is business-related, whether from personal guarantees on commercial loans, unpaid business taxes, or vendor obligations, no means test and no presumption of abuse can arise.5United States Courts. Chapter 7 – Bankruptcy Basics Entrepreneurs whose businesses failed and left them personally liable use this path regularly. Whether a specific debt counts as “business” rather than “consumer” turns on the purpose of each loan or obligation at the time it was incurred.
What Happens if the Means Test Says No
If the presumption of abuse applies and you can’t rebut it, your Chapter 7 case won’t just proceed. The U.S. Trustee or the court can move to dismiss. You then have a few choices:
- Convert to Chapter 13, the most common outcome. You enter a three- to five-year repayment plan funded by your disposable income, keep your assets, and pay under a trustee’s supervision.
- Ask the court to dismiss voluntarily. Debts stay intact, but some filers use dismissal to wait out the six-month lookback and refile later when the calculated income is lower.
- Contest the motion by presenting evidence of special circumstances. The burden is on you to prove the additional expenses are necessary and documented.
None of this happens automatically. The U.S. Trustee reviews every above-median filing and decides whether to raise the issue. If no motion comes, the case moves forward.