If you are looking at Chapter 13 because you did not pass the Chapter 7 means test, or because Chapter 13 fits your situation better, here is what you need to know: there is no means test for Chapter 13 eligibility. But your income still matters.
No Means Test for Eligibility
Section 707(b) -- the means test -- applies only to Chapter 7. There is no income-based test that can prevent you from filing Chapter 13. If you have regular income and your debts are within the statutory limits, you can file.
Chapter 13 Eligibility Requirements
- Regular income -- wages, self-employment income, Social Security, pension, or any other regular source
- Debt limits -- combined secured and unsecured debts must be below $2,750,000 (as of the 2024 adjustment)
- Tax filing -- you must have filed all required tax returns for the 4 years before filing
- Credit counseling -- you must complete an approved credit counseling course within 180 days before filing
How Income Determines Plan Length
While the means test does not block Chapter 13, your income relative to the state median determines a critical factor: how long your repayment plan must last.
| Your Income Level | Minimum Plan Length | Maximum Plan Length |
|---|---|---|
| At or below state median | 3 years (36 months) | 5 years (60 months) |
| Above state median | 5 years (60 months) | 5 years (60 months) |
This is set by Section 1325(b)(4). If you are above the median, your plan must run the full 5 years unless you pay 100% of your unsecured debts sooner. If you are below the median, you can propose a 3-year plan, though you may choose to go longer if needed to cover all required payments.
Why This Matters
A 3-year plan means 36 monthly payments. A 5-year plan means 60 monthly payments. That is two additional years of living on a court-supervised budget. For many people, the difference between 3 and 5 years is significant -- it affects your financial flexibility, life planning, and the total amount you pay to unsecured creditors.
The Disposable Income Test
Chapter 13 has its own income calculation -- the disposable income test under Section 1325(b). If the trustee or an unsecured creditor objects to your plan, you must commit all "projected disposable income" to plan payments for the applicable commitment period.
How It Works for Below-Median Debtors
If your income is at or below the state median, disposable income is calculated using your actual expenses -- what you really spend on housing, food, transportation, etc. This can be more or less favorable than the IRS standards, depending on your situation.
How It Works for Above-Median Debtors
If your income is above the state median, disposable income is calculated using the same IRS standards and deductions from the Chapter 7 means test. The form used is 122C-2 instead of 122A-2, but the methodology is similar.
Two Different Calculations, Two Different Purposes
| Feature | Chapter 7 Means Test | Chapter 13 Disposable Income |
|---|---|---|
| Statute | Section 707(b)(2) | Section 1325(b) |
| Purpose | Can you file Chapter 7? | How much must you pay unsecured creditors? |
| Expense method | IRS standards + actuals | Actuals (below median) or IRS standards (above median) |
| Projection period | 60 months | 36 or 60 months (plan length) |
| Consequence | Case dismissed or converted | Plan not confirmed -- must pay more or modify |
What You Must Pay in Chapter 13
Your Chapter 13 plan must satisfy several requirements:
- Priority debts in full -- back taxes, domestic support obligations, and other priority claims must be paid 100% through the plan
- Secured debts -- you must keep current on mortgage and car loan payments (or surrender the collateral)
- Disposable income commitment -- all projected disposable income goes to unsecured creditors for the plan period
- Best interests test -- unsecured creditors must receive at least as much as they would in a hypothetical Chapter 7 liquidation
- Trustee fee -- the Chapter 13 trustee takes a percentage (typically 6-10%) of plan payments as an administrative fee
The result is that your monthly plan payment covers all of these obligations. For some debtors, unsecured creditors receive very little (sometimes 0%) after priority debts, secured debts, and the trustee fee are accounted for. For others, especially above-median debtors, the unsecured portion can be substantial.
Forms You Will File
- Form 122C-1 -- Chapter 13 Statement of Your Current Monthly Income and Calculation of Commitment Period. Determines whether your plan runs 3 or 5 years.
- Form 122C-2 -- Chapter 13 Calculation of Your Disposable Income. Only required for above-median debtors. Uses IRS standards to calculate how much of your income must go to unsecured creditors.
Chapter 13 Completion Rates
Chapter 13 is a marathon, not a sprint. National data shows that roughly 33-40% of Chapter 13 cases end in discharge. The rest are dismissed -- often because the debtor could not maintain plan payments over the full 3 or 5 years. Job loss, medical emergencies, divorce, and other life events can derail a plan.
This is not meant to discourage you. Many people successfully complete Chapter 13 and emerge debt-free. But it is important to understand that Chapter 13 requires a sustained commitment over years, and you should plan for the possibility that circumstances may change during that time.
Check Your Median Income Status
Whether your Chapter 13 plan runs 3 years or 5 years depends on how your income compares to the state median. Check your status.
Not Legal Advice
This page provides general educational information about Chapter 13 and the disposable income calculation. Chapter 13 plan requirements, feasibility, and outcomes depend on your specific circumstances. Consult a licensed bankruptcy attorney.