How the Indiana Means Test Works for Chapter 7 Bankruptcy for Indianapolis, IN, in 2026
The Indiana means test determines whether you qualify for Chapter 7 bankruptcy for Indianapolis, IN. Many Marion County and Hamilton County residents assume they earn too much to qualify, but the full calculation often tells a different story.
What Is the Indiana Means Test?
The Indiana means test is a federal formula created by the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005. It compares your current monthly income, such as your average gross income over the six full calendar months before filing, to the median income for a household of your size in Indiana.
What Are the 2026 Indiana Median Income Thresholds?
These figures apply to cases filed on or after April 1, 2026, and are updated every April and November:
Annual Median Income by Household Size (Approx.):
- 1 person – $63,399
- 2 people – ~$83,000
- 3 people – ~$98,000
- 4 people – $112,216
- Each additional person – Add ~$11,100 per person
Household size includes anyone who depends on your income or shares expenses. A larger household means a higher threshold, which helps many families meet the qualification standard for Chapter 7 bankruptcy.
How Does Part 1 of the Means Test Work?
If your annualized income, such as your six-month average multiplied by 12, is at or below the figure for your household size, you pass Part 1, and most filers qualify for Chapter 7 bankruptcy. Certain income is excluded, including Social Security, some disability payments, and payments related to a national emergency.
What Counts as Income for the Means Test?
Income includes business income, rental income, interest and dividends, pensions, retirement distributions, unemployment income, and amounts paid by others toward your household expenses.
What Happens if You Fail Part 1?
Failing Part 1 means your income is above the median, but it does not disqualify you. You must complete Part 2, which deducts allowable expenses including IRS standard amounts, secured debt payments, taxes, insurance, and child care. Many above-median filers still qualify for bankruptcy once all deductions are applied. Housing costs in the Indianapolis metro area may differ from rural counties, and standardized expense tables account for these regional differences.
If you still do not pass, Chapter 13 allows debt repayment over three to five years with no income ceiling.
Can Filing Timing Affect the Means Test?
If one or two months had unusually high income, such as a bonus or severance, waiting for those months to fall outside the six-month window can change your result. This timing strategy is especially useful for people exploring bankruptcy, whose income fluctuates throughout the year.
How Can an Attorney Help With the Means Test?
An attorney reviews every allowable deduction, identifies excludable income, and helps you determine the best time to file. Errors in the means test can delay or jeopardize your case, so accurate completion matters.
Ready to Find Out if You Qualify? Talk to McManus and Associates.
McManus and Associates has served Indianapolis, Fishers, Carmel, Noblesville, and surrounding Marion and Hamilton County communities for over 25 years. The firm offers free consultation to help you understand your options.
Contact the team, or
learn more about Chapter 7 bankruptcy to get started.
