Not everyone qualifies for Chapter 7 bankruptcy. Section 707 allows courts to dismiss Chapter 7 cases for abuse -- including when the debtor earns too much to pass the "means test." Understanding these rules is critical before filing.
11 U.S.C. Section 707 provides three grounds for dismissing a Chapter 7 case:
The means test was added by the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA) and applies only to individual debtors with primarily consumer debts.
The means test is a two-step calculation designed to identify debtors who can afford to repay a meaningful portion of their debts through a Chapter 13 plan.
The debtor's "current monthly income" (CMI) -- averaged over the six calendar months before filing -- is annualized and compared to the median household income for a household of the same size in the debtor's state.
If the debtor's annualized CMI is at or below the applicable state median, the means test is satisfied and no presumption of abuse arises. The analysis stops here for most below-median filers.
If the debtor's income exceeds the state median, the means test proceeds to a detailed expense calculation. The debtor subtracts allowed expenses from their CMI to determine "disposable income." Allowed expenses include:
The resulting monthly disposable income is multiplied by 60 (the length of a Chapter 13 plan). If the result exceeds certain thresholds, a presumption of abuse arises:
| 60-Month Disposable Income | Result |
|---|---|
| Less than $9,075 (less than $151.25/month) | No presumption of abuse |
| $9,075 to $15,150 | Presumption arises if amount would pay 25% or more of non-priority unsecured debts |
| More than $15,150 (more than $252.50/month) | Presumption of abuse |
The dollar thresholds above are adjusted periodically for inflation. The amounts shown reflect recent adjustments. The U.S. Trustee publishes current means test data, median income figures by state, and IRS allowable expense standards on its website. Always check the current figures when filing.
If the presumption of abuse arises, it can be rebutted only by demonstrating "special circumstances" that justify additional expenses or adjustments to income for which there is no reasonable alternative. Section 707(b)(2)(B) gives examples: a serious medical condition, or a call to active duty in the Armed Forces.
The debtor must itemize each additional expense or income adjustment, provide documentation, and explain why no reasonable alternative exists. The special circumstances must be sufficient to bring the debtor's disposable income below the abuse threshold.
Even if the debtor passes the means test, the court can still dismiss the case for abuse under the "totality of the circumstances" of the debtor's financial situation. This is the general abuse analysis under Section 707(b)(3). Courts consider factors such as:
In considering under paragraph (1) whether the granting of relief would be an abuse of the provisions of this chapter in a case in which the presumption in paragraph (2)(A)(i) does not arise or is rebutted, the court shall consider -- (A) whether the debtor filed the petition in bad faith; or (B) the totality of the circumstances of the debtor's financial situation demonstrates abuse.
Section 707(a) allows dismissal "for cause" after notice and a hearing. Unlike 707(b), this subsection is not limited to consumer debtors and applies to all Chapter 7 cases. Common grounds include:
| Who | When | Basis |
|---|---|---|
| U.S. Trustee | Within 60 days of the 341 meeting (extendable for cause) | Means test or totality of circumstances |
| Bankruptcy trustee | Within 60 days of the 341 meeting | Means test or totality of circumstances |
| Any party in interest (creditor) | Within 60 days of the 341 meeting | Totality of circumstances only (not means test alone) |
| Court (sua sponte) | Any time | Any ground under 707(b) |
BAPCPA imposed significant obligations on attorneys who file Chapter 7 petitions. Under Section 707(b)(4), the debtor's attorney's signature on the petition certifies that the attorney has performed a reasonable investigation and determined that the filing is not an abuse. If the court finds that the attorney violated this duty, the court may order the attorney to reimburse the trustee for costs and attorneys' fees incurred in bringing a 707(b) motion.
If the court finds that an attorney filed a Chapter 7 petition that was abusive, the court can impose sanctions including requiring the attorney to pay the costs of dismissal proceedings. This provision was intended to prevent attorneys from filing Chapter 7 cases for clients who clearly belong in Chapter 13.
When a motion to dismiss under Section 707(b) is granted, the debtor typically has the option to convert the case to Chapter 13 rather than having it dismissed. Conversion preserves the automatic stay and the bankruptcy estate, and allows the debtor to propose a repayment plan. The debtor must consent to conversion -- the court cannot force conversion without the debtor's agreement.
The Supreme Court held that a debtor who owns a vehicle free and clear (no loan payment) cannot deduct the IRS Local Standard vehicle "ownership" cost on the means test. The deduction is available only to debtors who actually make loan or lease payments on a vehicle. This decision narrowed the expense deductions available on the means test.
The Supreme Court held that bankruptcy courts may account for known or virtually certain changes in the debtor's income when calculating projected disposable income for Chapter 13 plans. While this case dealt with Chapter 13 (Section 1325(b)), the reasoning affects how current monthly income is interpreted in 707(b) means test calculations.
An early post-BAPCPA case interpreting the totality-of-circumstances test. The court found abuse where the debtors had significant disposable income, had recently purchased luxury items, and could fund a Chapter 13 plan that would repay a substantial portion of their debts.
| Section | Subject | Relevance |
|---|---|---|
| 707(a) | Dismissal for cause | Nonpayment, delay, failure to file documents |
| 707(b)(1) | Abuse standard | General ground for dismissal of consumer cases |
| 707(b)(2) | Means test | Mathematical formula for presumption of abuse |
| 707(b)(3) | Totality of circumstances | Bad faith or general abuse even if means test passes |
| 109(b) | Chapter 7 eligibility | Who may be a Chapter 7 debtor |
| 1325(b) | Chapter 13 disposable income | Uses similar income/expense framework |
| 727 | Chapter 7 discharge | Grounds for denying discharge (distinct from dismissal) |
Check whether a prior filing bars your discharge under Section 1328(f), 727(a)(8), or 727(a)(9).
Use the Eligibility CheckerThis tool is free and open-source. Donations fund PACER access fees and our goal of forming a 501(c)(3) nonprofit for bankruptcy court transparency.
Support on Ko-fi