Social Security Income and Disability Benefits When Taking a Bankruptcy Means Test

Before filing for bankruptcy, you need to take a Chapter 7 bankruptcy means test.
Information in this article does not constitute legal advice, it is for informational purposes only, and may not constitute the most up-to-date information. Readers should contact their attorney for advice on any particular legal matter.

How Does Chapter 7 Means Test Work?

A Chapter 7 bankruptcy means test is taken to determine if a debtor is eligible for bankruptcy discharge. It is used to evaluate the income requirements the debtor should meet to qualify to file Chapter 7 bankruptcy. 

There is a state median level of income. If your average annual income is below the state's median, then you will be eligible to file. If your annual income is above the state's median, you might qualify to file Chapter 7 bankruptcy only if your disposable income is lower than a certain amount. The Means Test also calculates disposable income. Use this free Chapter 7 calculator we built to help debtors determine their eligibility. 

Table of Contents

Should I Consider Disability or Social Security Income when Taking the Means Test?

You will not need to include your social security income. According to the Social Security Act, income from social security is exempted from the Bankruptcy means Test. As such, you should not include any income from:

Do I Include Social Security Income or Disability Income on the Means Test?

Income received under the Social Security Act is generally exempt from the Bankruptcy Means Test. Therefore, you would not include income from:

Social Security Disability

You will not be asked to provide income from social security disability when taking a Means Test. The income is protected by federal law and is paid to citizens who cannot work because they suffer from a disability that meets the Social Security Administration's definition of 'disabled.'

Social Security Retirement

Income from social security retirement is treated as an asset, not an income. So, you do not need to include how much you get from social security retirement. Still, you can voluntarily add the income when filing for Chapter 13 bankruptcy to help with your repayment. 

Do you know how much you are likely to receive from Social Security if you retire? If you would like to know, take our free social security calculator. You will get an estimate of your total payout and expected average monthly payout. 

Supplemental Security Income

Like the others, supplemental security income fall under the protection of federal law. They are benefits for low-income disabled individuals who don't get SSDI benefits. 

Disability Income- State, Private, etc.

Any disability income, be it from the state, private companies, or other sources, should be included in the calculations. However, since bankruptcy exemptions are different from state to state, consult a bankruptcy attorney in your state. They can help you know if your disability income is protected or not in a bankruptcy case. 

The Chapter 13 Bankruptcy Means Test

Chapter 7 is more common, especially among people with social security or disability income. In Chapter 13, the Means Test is used to evaluate your disposable income. It sheds light on how much money you have to channel towards your unsecured debts through the repayment plan.

The disposable income is calculated based on the average monthly income you have been getting for the previous six months before filing. The total income, minus monthly expenses, gives your disposable income. The test will also help gauge the repayment period of your plan. If your average income is lower than the state median, you can file a 36-month plan. If it is higher, you will have to commit to a 60-month plan.

Social Security Income in Chapter 13

Depending on the situation, sometimes, disability income will be included when taking your means test. It will also be included in your budget. Local bankruptcy jurisdictions, however, may have different rules on Social Security income. Therefore, while the income may be exempt, it narrows down to your jurisdiction. If you receive any form of social security income, consult a bankruptcy lawyer in your state. Disclose every source of income you have, including retirement and disability, and work a way forward. 

What Income Should I Include When Taking the Bankruptcy Means Test?

You will need to include most household income when taking the Means Test to calculate your monthly and annual income accurately. Include your:

  • Wages and salaries, including overtime wages and bonuses
  • Unemployment income
  • Income from a business, inclusive of rental income
  • Investment Income
  • Income from a side hustle or part-time job
  • Income from interest, royalties, dividends, and annuities
  • Commissions
  • Tips
  • State disability income
  • Pension and retirement
  • Net income from a profession or farm
  • Alimony/spousal support 

If your spouse will not be filing bankruptcy as you file, you will have to include their income, as it is considered household income. You can, however, claim household expenses for every person in your household, whether they are filing bankruptcy or not. 


You now understand what income to file when taking a bankruptcy means test. Take our free bankruptcy means test calculator below and estimate if you qualify or not. Hopefully, you do!

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