Attorney at Debt Advisors Law Offices
Practice Areas: Chapter 7 Bankruptcy, Chapter 13 Bankruptcy, Stop Foreclosure
Filing for bankruptcy is a serious step, and one of the first hurdles for Wisconsin residents considering Chapter 7 is something called the “means test.” This test was created to make sure the system is fair, and that Chapter 7 relief is reserved for people who truly need it. If you’ve heard about it and feel unsure what it means for your situation, you’re not alone.
In this article, we break down how the Chapter 7 means test works in Wisconsin, the income limits involved, and what options you may still have if you don’t qualify the first time.
This test was introduced under the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005. Its purpose is simple: to ensure that people who truly cannot pay their debts have access to Chapter 7 relief, while those with enough disposable income may be directed toward a repayment plan under Chapter 13.
The means test has two main parts. The first compares your household income to the Wisconsin median income. The second looks at your disposable income after deducting certain allowed expenses. Passing either part usually means you qualify for Chapter 7.
The first step is comparing your average household income for the past six months to the Wisconsin median income for a household of your size. If your income is lower, you automatically qualify for Chapter 7. If it is higher, you must continue to the second part of the test.
The U.S. Trustee Program publishes updated income limits every year, based on U.S. Census data. For the most recent Wisconsin figures, you can visit the U.S. Department of Justice site.
| Household Size |
Median Income (WI, 2025) |
Eligibility Outcome |
| 1 person | $65,500 (approx.) | Below → Qualify |
| 2 persons | $81,000 (approx.) | Above → Move to disposable income test |
| 3 persons | $100,000 (approx.) | — |
| 4 persons | $115,000 (approx.) | — |
| Each add. person | +$9,900 | Adjust upward |
These numbers change regularly, so always confirm current limits with an attorney or the U.S. Trustee Program.
As of 2025, Wisconsin’s median income for a family of four is approximately $115,000. Households earning less generally qualify under Chapter 7.
If your income is above the Wisconsin median, the disposable income test comes into play. This test subtracts allowable expenses from your gross income to see how much you could pay unsecured creditors over the next five years.
Allowable expenses include:
Wisconsin cost-of-living differences also matter. For example, households in Milwaukee County may have higher allowable housing costs than those in rural areas.
If the remaining disposable income after deductions is too high, you may be directed to file Chapter 13 instead of Chapter 7.
Chapter 7 bankruptcy can eliminate many forms of unsecured debt. Common examples include credit card balances, payday loans, personal loans, medical bills, and deficiency balances on vehicles or real estate after repossession or foreclosure.
However, some debts cannot be discharged. These include student loans (except in rare hardship cases), child support, alimony, certain recent taxes, and court-ordered restitution. Understanding this distinction is crucial before deciding which bankruptcy chapter is the right fit.
Failing the means test does not mean you are out of options. Many Wisconsin residents who do not qualify for Chapter 7 are still able to file under Chapter 13.
Chapter 13 involves creating a repayment plan lasting three to five years, allowing you to keep assets such as your home or car while catching up on overdue payments.
While it requires more commitment, it can still provide meaningful relief from overwhelming debt.
Many people believe that earning above the median income automatically disqualifies them from Chapter 7. This is not true. Passing the disposable income test can still make you eligible.
Another common mistake is underreporting or overestimating expenses. The means test uses a mix of IRS standard allowances and actual costs. Providing accurate documentation of your household expenses is critical.
Debt Advisors Law Offices is a debt relief agency. As experienced Wisconsin bankruptcy lawyers, our team guides clients through the Chapter 7 means test and other bankruptcy options.
It is a two-part calculation that compares your income and expenses to state and federal standards to determine eligibility.
Compare your six-month average income to the Wisconsin median income for your household size.
Typical deductions include housing, transportation, medical costs, and IRS standard allowances.
You may still file under Chapter 13 and create a repayment plan lasting three to five years.
No. Certain obligations like student loans, child support, and most tax debts remain after bankruptcy.
You can usually file every eight years, measured from the date of your previous discharge.
The Chapter 7 bankruptcy means test in Wisconsin is designed to balance fairness and access. While it may appear complicated, many households that genuinely need relief are able to qualify. For those who do not, Chapter 13 bankruptcy can still provide an effective path forward.
If debt is weighing heavily on your family, working with an experienced Wisconsin bankruptcy lawyer can make all the difference in understanding your options. Debt Advisors Law Offices has helped residents across Milwaukee, Madison, Kenosha, Sheboygan, Oshkosh, and Green Bay navigate the means test and move toward a financial fresh start.
Schedule your free consultation today to learn more about which bankruptcy solution may be right for you.
Learn about bankruptcy protections, types of bankruptcy, how to get started, what to expect, and who to trust. Filing bankruptcy is the ONLY way to completely eliminate debt. If bankruptcy is right for you, it offers powerful protections that cannot be achieved through alternative solutions such as hardship relief, loans, or debt settlement.
