Your Social Security Income on the Chapter 7 Means Test

Your Social Security income is not included in means test calculations.

If you file for Chapter 7 bankruptcy, your Social Security income will not be included when you take the “means test.” Read on to learn what the means test is, and why it matters that Social Security doesn't count as income for this test.

(For a full discussion the means test, and the role it plays in Chapter 7 bankruptcy, see The Means Test in Chapter 7 Bankruptcy.)

What Is the Means Test?

In order to qualify for a Chapter 7 bankruptcy, you must pass the means test. This test uses a monthly average of the income you receive during the six months before filing bankruptcy to determine whether that income is above or below the median income level in your state.

If your income is below the median state income level, you pass the means test. This is commonly referred to as a "short-form means test," because you only complete the first of two means test bankruptcy forms (Form 122A-1, Chapter 7 Statement of Your Current Monthly Income)

If your income is above the state median income, you must complete the second means test form (Form 122A-2 Chapter 7 Means Test Calculation) which does a further analysis of your income and expenses to determine if you can file for Chapter 7. This is referred to as the "long form means test."

Social Security Is Not Included as Income for the Means Test

When taking the means test, you do not include as income any Social Security benefits that you receive for yourself or on behalf of others, such as a dependent child. This has a distinct advantage: You are more likely to pass both the short-form and the long-form means test because your resulting monthly income will be lower than if the Social Security benefits were included.

Social Security Benefits Are Included on Other Bankruptcy Forms

Regardless of the outcome of your means test, you will also be required to complete Schedule I: Your Income. Schedule I shows the court how much income you expect to receive going forward, which may differ from the figure on the means test, for example, if you recently lost your job or anticipate a substantial bonus from work. Unlike the means test, you must list your Social Security benefits on Schedule I of the bankruptcy forms.

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