The means test determines whether someone qualifies for Chapter 7 bankruptcy or must file Chapter 13. It was added by the 2005 Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA).
New Mexico median income (4-person family)
Approximately $94,000. Updated every 6 months. Adjusted by household size.
Two-step test
Step 1: Compare current monthly income to state median.
- Current monthly income = average over 6 calendar months pre-filing × 12
- Includes nearly all sources (wages, self-employment, rental, dividend, child support received, unemployment in some cases)
- Excludes Social Security, public benefits in some cases, payments to crime / war victims
If below state median = pass automatically. Chapter 7 available.
Step 2 (if above median): calculate disposable income.
- Subtract allowed expenses (IRS National + Local Standards + actual amounts for some categories)
- Resulting number is "disposable income"
- If disposable income × 60 months > $9,075 (2024) — presumed abuse, Chapter 7 not available
- If disposable income × 60 months < $5,450 — Chapter 7 available
- Between $5,450 and $9,075 — additional analysis based on % of unsecured debt
What counts as income
Counted (in 6-month average × 12):
- Wages and salary
- Bonuses and commissions
- Self-employment income
- Rental income
- Investment income
- Pension / retirement income
- Unemployment compensation
- Child support received
- Spouse's contribution (in some cases)
- Workers' comp
- Disability payments
- Annuity payments
Excluded:
- Social Security (excluded for means test purposes)
- Veterans' benefits
- Some payments to crime / war victims
Allowed expenses (above-median filers)
IRS National Standards (fixed):
- Food / clothing / personal care
- Out-of-pocket healthcare
IRS Local Standards (varies by region):
- Housing + utilities
- Transportation (vehicle ownership + operation)
Actual amounts (no cap or limited cap):
- Federal / state / local taxes
- FICA
- Mandatory employment expenses (uniforms, tools)
- Health insurance / disability insurance
- Court-ordered payments (alimony, child support, criminal restitution)
- Education for handicapped child
- Childcare for work
- Communication costs (limited cellphone)
- Charitable contributions (up to 15% of gross income)
- Continued contributions to retirement (varies by court)
- Mortgage / rent / car payments (secured debt)
- Childcare costs
- Family member care for elderly / chronically ill
Special circumstances
Even if you fail the means test, you can still get Chapter 7 by showing special circumstances:
- Serious medical condition
- Active duty military / disabled veteran
- Recent unemployment / income reduction (use post-filing realistic numbers)
- Other unusual factors that justify higher expenses
Special circumstances must be documented and proved.
Means test in Chapter 13
Even Chapter 13 filers complete the means test:
- Below median income → 3-year plan minimum
- At or above median → 5-year plan required
Disabled veterans + military exception
Disabled veterans (with debt incurred during active duty) and active-duty military members are largely exempt from the means test entirely.
Common manipulation
Bankruptcy trustees scrutinize:
- Recent income changes — sudden raises before filing
- Voluntary expense increases — bigger house / car right before filing
- Asset transfers — moving assets to family / friends
- Excess household members — claiming roommates as dependents
- Tax over-withholding — getting income out via refunds
- Inflated expenses — claiming amounts above actual
Bankruptcy fraud carries criminal penalties.
Form 122A-1 / 122A-2 / 122C-1 / 122C-2
The means test is completed on official forms:
- 122A-1 = Chapter 7 statement of current monthly income
- 122A-2 = Chapter 7 means test calculation (if above median)
- 122C-1 = Chapter 13 income
- 122C-2 = Chapter 13 disposable income calculation
What you should do
Run the means test BEFORE filing. Most New Mexico bankruptcy attorneys offer free initial consultations and can quickly tell you whether Chapter 7 is realistic. Many use specialized bankruptcy software (e.g., Best Case, NextChapter) to run the calculations precisely. Don't try to file Chapter 7 yourself if you're close to the median — the calculations are technical and trustees may challenge incorrect filings.
---
This guide is general information about federal bankruptcy law and New Mexico-specific median figures as of early 2026 and is not legal advice. Median figures update every 6 months. Talk to a licensed New Mexico bankruptcy attorney about your specific situation.