Bankruptcy Means Test in Oregon
 The bankruptcy means test is the income check that decides whether you can file Chapter 7 in Oregon, and for most people it is far easier to pass than they fear.
If you are researching bankruptcy and worried that you make too much to qualify, the means test is what you are really asking about. At Hutchinson Legal Services, we run this analysis for Oregon clients before we file, so you know where you stand instead of guessing.
Here is the part that surprises people: the test is a gate, not a wall. Most filers fall below the Oregon median income and clear it on the first step alone, with no complicated math. A Chapter 7 bankruptcy is within reach for far more people than realize it.
Our firm has filed bankruptcy in Oregon since 1997, and the means test is a routine part of nearly every consumer case we handle. We treat it as a practical question with a practical answer, not a hurdle built to keep you from relief.
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What Is the Bankruptcy Means Test?
The means test is an income screen Congress added to bankruptcy law in 2005. Its job is to sort filers between two chapters: people who genuinely cannot repay their debts, who can use Chapter 7 to wipe most of them out, and people the law expects to repay a portion through a Chapter 13 plan.
In plain terms, the test asks one question: based on your income and expenses, can you afford to pay back a meaningful share of what you owe? If the answer is no, Chapter 7 is open to you. If the answer is yes, the law steers you toward repayment instead. Either way, you are not shut out of bankruptcy; the test just decides which door you walk through. It is one piece of the larger picture we map out when we go through your bankruptcy options together.
The Two Parts of the Means Test
The means test sounds intimidating, but it runs in two steps, and most people never get past the first one.
Step One: The Oregon Median Income Comparison
The first step compares your income to the median income for an Oregon household of your size. We take your average gross income over the six months before filing, annualize it, and line it up against the state median. If you land at or below that median, you pass, and you can file Chapter 7 without going any further. The income limits change a couple of times a year and depend on household size, so we check them against the U.S. Trustee Program’s current Oregon figures for the exact date you file. One detail that helps many people: not every dollar counts, and Social Security benefits are left out of the calculation entirely.
Step Two: The Disposable Income Calculation
If your income is above the Oregon median, you are not disqualified. You move to the second step, where we subtract allowed living expenses, based on IRS standards and your actual obligations, from your income to find your monthly disposable income. If what is left is low enough, you still qualify for Chapter 7. If it is high enough that the law presumes you could repay a meaningful share of your debt, Chapter 7 is generally off the table, and Chapter 13 becomes the path. This step is not built to trap you. It is built to match you to the chapter that fits your numbers.
Your Bankruptcy Attorney in Beaverton
Scott M. Hutchinson has practiced bankruptcy law for more than 29 years and has filed over 2,000 bankruptcies. Early in his career he worked on both the debtor and creditor sides of bankruptcy at two of the largest firms on the West Coast, so he knows how a trustee scrutinizes a means test calculation. His attorney bio covers that background in full.
The means test is where small mistakes get expensive. The six-month income window, the expenses the IRS standards allow, the way household size is counted: each of these can change the result. Scott handles Chapter 7, Chapter 13, and Chapter 12, so when he reads your numbers, the recommendation is the chapter that genuinely fits, not the only one the firm files.
How We Run Your Means Test Analysis
We run the means test as a four-step checklist, and we handle the parts that trip people up.
Gather Six Months of Income
We start by pulling together your income for the six full calendar months before you would file. Because the test uses an average, timing can matter. If your income recently dropped, waiting a month or two can change which side of the median you land on, and we will tell you if that is worth doing.
Run the Median Comparison
Next we compare your annualized income to the current Oregon median for your household size, using the figures in effect on your filing date. For most clients, this is where the analysis ends, because they come in below the median and qualify for Chapter 7 on the spot.
Complete the Full Calculation If Needed
If you are above the median, we complete the longer calculation, applying the allowed expense standards to find your disposable income. This is detailed work, and getting the expense categories right is what determines the outcome. You can get a head start by filling out our bankruptcy intake forms before we meet.
Match You to the Right Chapter
Once the numbers are in, we tell you plainly which chapter fits and why. There is no suspense and no guesswork, just a clear answer you can act on.
What Passing or Failing Means for Your Filing
The means test is not the goal. It is a fork in the road, and where you land points you to the chapter that fits.
If you pass, Chapter 7 is open to you. That is the faster route, often wrapping up in a few months, with most eligible debt discharged. If you do not pass, bankruptcy is still very much available to you. It usually means Chapter 13 instead, where you repay part of what you owe through a court-approved plan and discharge the rest at the end. There are real reasons people choose Chapter 13 even when they could file Chapter 7, from catching up a mortgage to stopping a wage garnishment.
Some people skip the means test altogether. If your debts are mostly business debts rather than consumer debts, the test does not apply. Family farmers and fishermen have their own track with separate rules. And certain disabled veterans and activated reservists are exempt based on when and how their debts arose.
Because we file Chapter 7, Chapter 13, and Chapter 12, the chapter we point you to is the one your numbers support, not the one that happens to suit us. That is the whole value of running the test before you file.
Why Work With Our Firm
The means test rewards precision, and precision is hard to get right on your own. Our firm has filed bankruptcy in Oregon since 1997, and our attorney has filed over 2,000 cases. We know which expenses the standards allow, how the Oregon figures shift through the year, and where filers most often miscount and disqualify themselves by accident.
We also file every consumer chapter ourselves, so the test is a tool, not a sales pitch. If your numbers point to Chapter 7, we will say so. If they point to Chapter 13, we will say that instead. From our Beaverton office, we run the means test for clients across Oregon, and the first step is always the same: an honest look at your income and what it means for your filing.
Means Test and Bankruptcy Costs
Cost matters, and we will be straight with you about it. The means test itself is part of preparing your case, not a separate charge, and what your overall bankruptcy costs depends on the chapter you file and the complexity of your situation.
We keep our fees reasonable and offer payment plans so you are not paying everything at once. Your first consultation is free and confidential, and we go over the means test, the likely chapter, and fees at that free consultation.
We will not quote a flat figure before we understand your numbers, because an honest estimate depends on what the means test shows and which chapter fits. After we review your situation, you will know what to expect before you commit.
Schedule Your Consultation
If you are not sure whether you qualify for Chapter 7, the means test is exactly the question we can answer for you. Call Hutchinson Legal Services at (503) 808-9032 or request an appointment online to set up a free, confidential consultation. We’re at 12655 SW Center St., Suite 505 in Beaverton, Oregon 97005. You can also reach us through our Contact page with any questions before you come in.
Frequently Asked Questions
How do I know if I pass the means test in Oregon?
Take your gross income for the last six months, divide by six, then multiply by twelve, that’s the annualized figure the test compares to the Oregon median for your household size. Household size includes you and your dependents, which trips people up, because a larger household usually means a higher median to clear. If you land at or below it, you pass step one and qualify for Chapter 7.
Does making too much money automatically disqualify me from Chapter 7?
No. Earning above the Oregon median doesn’t shut the door; it just sends you to the second step, the disposable income calculation. A higher earner with high allowed expenses, a large mortgage, several dependents, significant medical costs, can still come out with little disposable income and qualify for Chapter 7. Income alone rarely settles it.
Is my Social Security income counted in the means test?
No. Social Security benefits are excluded from the income calculation entirely. This can be decisive for retirees and people on disability, whose countable income may fall below the median once Social Security is set aside, even if their total monthly deposits look higher. Other benefit types are treated differently, so it’s worth reviewing each source with us.
What happens if I don’t pass the means test?
You file Chapter 13 instead, and you can still get substantial debt relief. The plan length depends on your income: filers below the median generally run a three-year plan, while those above it run five years. Plenty of people who don’t qualify for Chapter 7 walk away from Chapter 13 with the same fresh start, just on a schedule.
Does the means test apply to business debts?
Often not. The test screens consumer debt, so if your debts are primarily business debts rather than personal ones, you may be exempt from it when filing Chapter 7. That distinction matters for owners weighing business bankruptcy, and we work through whether your debts count as mostly business or mostly consumer during your consultation.
Will the means test make me lose my house or car?
No, and this is a common mix-up. The means test only decides which chapter you can file; it has nothing to do with which property you keep. What protects your home, car, and other assets is a separate set of rules, the Oregon bankruptcy exemptions, and most filers keep everything they own. The income test and the property test are two different questions.
What if my income comes from a farm or fishing operation?
Family farmers and fishermen have a dedicated chapter, Chapter 12 bankruptcy, which uses its own eligibility rules instead of the standard means test. If your livelihood is a farm or commercial fishing operation, Chapter 12 is usually the better fit, and we file those cases too.
Can I run the means test myself, or do I need a lawyer?
You can attempt it, but the disposable income calculation is where do-it-yourself filers slip. The IRS expense standards, the six-month income window, and how household size is counted all have rules that aren’t obvious, and a miscount can flip your eligibility or invite a trustee challenge. We run the full analysis so the number you rely on is the number the court will accept. |
