Illinois Bankruptcy Means Test: How to Qualify for Chapter 7 in 2024
Before you can file Chapter 7 in Illinois, you must pass a federal income test. The good news: most Illinois filers qualify — and if your income is at or below the state median, you pass automatically. Here's exactly how the Illinois bankruptcy means test works, step by step.
In This Guide
- What Is the Means Test and Why Does It Exist?
- Illinois Median Income Limits (2024)
- Part 1: The 6-Month Income Calculation
- Part 2: Disposable Income (If You're Over the Median)
- Illinois-Specific Expenses That Help You Pass
- Common Mistakes That Cause People to Fail
- What If You Don't Pass the Means Test?
- How to Start Your Illinois Bankruptcy Preparation
What Is the Means Test and Why Does It Exist?
The bankruptcy means test is a federal formula established by the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) of 2005. Before BAPCPA, any individual could file Chapter 7 bankruptcy regardless of income. Congress introduced the means test to ensure that Chapter 7 — which eliminates most unsecured debts without repayment — is reserved for people who genuinely cannot repay what they owe.
The test has two parts. Most Illinois filers never reach Part 2 because they pass on income alone.
Part 1 — Income Threshold
Compare your average monthly income (annualized) to Illinois's median income for your household size. If you're at or below the median, you pass automatically and qualify for Chapter 7.
Part 2 — Disposable Income Calculation
Only required if your income exceeds the median. Subtract IRS-allowed expenses, healthcare costs, and secured debt payments from your income. If the remaining disposable income is below the threshold, you still qualify for Chapter 7.
Illinois Median Income Limits (2024)
If your annualized income is at or below these figures for your household size, you automatically pass the Illinois means test — no further calculation needed. These are approximate 2024 figures published by the U.S. Trustee Program:
Households larger than 6: Add approximately $9,000/year for each additional person. Source: U.S. Trustee Program. Figures are updated periodically — verify current amounts at justice.gov/ust/means-testing.
What this means for you:
- ✓Income AT OR BELOW the Illinois median → Automatic pass → Qualify for Chapter 7
- ✓Income ABOVE the Illinois median → Must complete Part 2 (disposable income test)
- ✓Passing Part 1 means you do not need to complete Form 122A-2
Part 1: The 6-Month Income Calculation
The means test does not use your current paycheck. It uses your Current Monthly Income (CMI) — the average of all income received during the 6 full calendar months before the month you file. You then multiply that monthly average by 12 to get your annualized figure for comparison to the Illinois median.
How to calculate your CMI:
- 1Add up ALL income received in the 6 calendar months before the month of filing
- 2Divide the total by 6 to get your monthly average
- 3Multiply by 12 to annualize the figure
- 4Compare to the Illinois median for your household size
INCLUDED in CMI
- ✓Wages, salary, tips, commissions
- ✓Net self-employment income
- ✓Rental income
- ✓Pension and retirement distributions
- ✓Unemployment compensation
- ✓Regular contributions from others in the household
- ✓Interest, dividends, royalties
NOT INCLUDED in CMI
- ✗Social Security benefits (all types)
- ✗Supplemental Security Income (SSI)
- ✗VA disability compensation
- ✗Tax refunds (generally)
- ✗Payments to crime victims
- ✗Payments to war crime victims
Part 2: Disposable Income (If You're Over the Median)
If your annualized CMI exceeds the Illinois median for your household size, you must complete Part 2 — the full disposable income calculation. This is where many above-median Illinois filers still qualify, because the allowed deductions are substantial.
The calculation subtracts allowed expenses from your CMI to arrive at a monthly disposable income figure. Deductions fall into two broad categories:
IRS Standard Expense Deductions
National Standards for food, clothing, housekeeping supplies, and personal care. IRS Local Standards for housing and utilities (which vary significantly by Illinois county) and transportation (vehicle ownership costs + operating costs). Actual amounts for health insurance premiums, out-of-pocket healthcare, childcare, and education.
Debt Payment Deductions
Secured debt payments (mortgage, car loans) and priority debt payments (back taxes, child support, alimony) are deducted before calculating disposable income. These can dramatically reduce your disposable income figure.
Once deductions are applied, compare your monthly disposable income to these thresholds:
Disposable income BELOW the threshold
You QUALIFY for Chapter 7
Disposable income ABOVE the threshold
You do NOT qualify for Chapter 7 — Chapter 13 applies
Gray zone (in between)
Multiply monthly disposable income × 60. If result is less than the nonpriority unsecured debt threshold → you may still qualify
Illinois-Specific Expenses That Help You Pass
The IRS Local Standards used in Part 2 are set by region — which means Illinois filers in different parts of the state get different allowances. Understanding these differences can make a significant impact on your disposable income calculation.
Cook County vs. Downstate Housing Allowances
Housing and utility allowances are substantially higher for Cook County (Chicago metro) than for downstate Illinois counties. If you live in Cook, DuPage, Kane, Lake, McHenry, or Will counties, you're in the Chicago metro region and receive higher IRS Local Standard housing deductions — which can meaningfully reduce your disposable income.
Car Ownership Allowances
If you own a vehicle (even with no car payment), you can deduct the IRS car ownership allowance. If you have a car loan or lease, you can also deduct the actual monthly payment. Illinois filers with two vehicles can deduct allowances for both — a significant deduction for families.
Healthcare Deductions
Health insurance premiums (your actual cost), out-of-pocket medical and dental expenses, and health savings account (HSA) contributions are all deductible at actual amounts. Illinois residents with high insurance costs or chronic health conditions can often deduct thousands of dollars per year.
Union Dues and Mandatory Payroll Deductions
Required payroll deductions — union dues, mandatory retirement contributions, and similar involuntary deductions — are counted as allowable expenses. For many Illinois workers in unionized industries, this provides meaningful additional deductions.
Tip: Many Illinois filers who initially appear to fail the means test discover they qualify once all allowable deductions — especially Cook County housing costs and healthcare premiums — are properly documented and applied.
Common Mistakes That Cause People to Fail
These are the four errors that most often derail Illinois means test calculations — each one can result in an unnecessary disqualification or a trustee challenge.
Including Social Security in CMI
Social Security — retirement, SSDI, and SSI — is explicitly excluded from Current Monthly Income by federal statute. Including it overstates your CMI and may push you over the median threshold when you would otherwise pass automatically. This is the single most common mistake among older and disabled filers.
Forgetting to Annualize
The means test compares your annualized income to the state median. After averaging your 6-month income, you must multiply by 12. A common error is comparing the monthly average directly to the annual median figures — which would make everyone appear to qualify.
Missing Allowed Deductions
The IRS expense standards represent minimum allowed deductions — you can deduct the standard amount even if you spend less. But actual expenses for healthcare, childcare, and care for elderly or disabled family members are deducted at actual cost. Many filers undercount these, leaving money on the table and inflating their disposable income.
Filing Too Soon After a High-Income Month
The 6-month look-back window is unforgiving. If you received a large bonus, insurance settlement, or overtime payout in the past 6 months, it will inflate your CMI even if that income was a one-time event. Waiting until those months fall outside the look-back window — while painful — can make the difference between qualifying and being pushed into Chapter 13.
What If You Don't Pass the Means Test?
Failing the means test does not close the door on bankruptcy relief. You have three meaningful options:
File Chapter 13 Instead
Chapter 13 is available to filers who don't qualify for Chapter 7. Rather than eliminating debts immediately, you enter a court-supervised repayment plan lasting 3 to 5 years. At the end of the plan, remaining eligible debts are discharged. Chapter 13 also lets you catch up on mortgage arrears and, in some cases, strip junior liens from your home.
Wait for Your Income Average to Drop
Because CMI is calculated on a 6-month rolling average, temporarily high income months will eventually fall outside the look-back window. If you received a large bonus, seasonal income, or a second job that has since ended, waiting a few months may bring your CMI below the Illinois median. This approach requires patience but preserves your Chapter 7 eligibility.
Apply for a Special Circumstances Exception
Even above-median filers who technically fail Part 2 can file Chapter 7 if they can demonstrate 'special circumstances' — typically extraordinary expenses not captured by IRS standards, such as serious medical conditions requiring ongoing treatment, or a significant income reduction that hasn't yet been reflected in the 6-month average. Courts grant these on a case-by-case basis.
How to Start Your Illinois Bankruptcy Preparation
You can begin evaluating your means test eligibility right now with four concrete steps:
Calculate your 6-month average income
Gather pay stubs, bank statements, and any other income documentation for the 6 full calendar months before the month you plan to file. Add up all qualifying income (excluding Social Security and VA benefits) and divide by 6.
Compare to the Illinois median for your household size
Multiply your monthly average by 12 and compare to the table above. If you're at or below the median, you qualify for Chapter 7 — you can proceed directly to organizing your bankruptcy documents.
Gather your allowed expense documentation
If your income is above the median, collect documentation for all potential deductions: health insurance premium statements, car loan statements, mortgage or lease documents, receipts for childcare, and records of any mandatory payroll deductions.
Use JustiPal™ to organize your paperwork before speaking with a preparer
The JustiPal™ Bankruptcy Intake Workflow guides you through every document you'll need — income schedules, asset lists, debt records, and exemption documentation — so you arrive fully prepared, whatever your means test result.
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JustiPal™ is a document preparation platform, not a law firm, and does not provide legal advice. The Bankruptcy Intake Workflow helps you organize your case information — it does not constitute legal representation.
Frequently Asked Questions
What is the Illinois bankruptcy means test?
The Illinois bankruptcy means test is a two-part federal formula that determines whether you qualify to file Chapter 7 bankruptcy. Part 1 compares your average income over the past 6 months (annualized) to Illinois's median income for your household size. If you're at or below the median, you pass automatically. If you're above it, Part 2 calculates your disposable income after allowed deductions — if that figure is low enough, you still qualify for Chapter 7.
What are the 2024 Illinois median income limits for bankruptcy?
The approximate 2024 Illinois median income limits are: 1 person — ~$56,000/year; 2 people — ~$75,000/year; 3 people — ~$88,000/year; 4 people — ~$104,000/year. Add approximately $9,000/year for each additional household member beyond 4. If your annualized income is at or below these figures, you automatically pass the means test.
What happens if I fail the means test?
If you fail the Illinois means test, you have several options: file Chapter 13 (a 3–5 year repayment plan), wait 6 months for high-income months to drop out of your look-back window, apply for a special circumstances exception, or complete Part 2 of the test to see if allowed deductions bring your disposable income below the threshold.
Does Social Security count in the Illinois means test?
No. Social Security benefits — including retirement benefits, SSDI, and SSI — are explicitly excluded from Current Monthly Income (CMI) under the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA). This exclusion often brings retirees and disabled filers well below the Illinois median, making them automatic qualifiers for Chapter 7.
Can I still file Chapter 7 if I'm over the median income?
Yes. Being over the Illinois median income does not automatically disqualify you from Chapter 7. You must complete Part 2 of the means test, which subtracts IRS-allowed expenses (National Standards for food and clothing, Local Standards for housing and transportation by county), actual healthcare costs, and secured debt payments. If your resulting disposable income is below the threshold, you still qualify.
Not Legal Advice
JustiPal™ is not a law firm and does not provide legal advice. This article is for informational purposes only. Means test thresholds are updated periodically — verify current figures at the U.S. Trustee Program. Consult a licensed bankruptcy attorney for advice specific to your situation.
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