The Arizona bankruptcy means test decides who qualifies for Chapter 7 and who gets routed toward Chapter 13 instead. Under 11 U.S.C. § 707(b), the test compares a filer’s income against the state’s median for a household of the same size. Passing it isn’t automatic. But for most Arizona filers, it’s more straightforward than the name suggests.
Arizona bankruptcy means test step one: the income comparison
First, the test looks at average monthly income over the six months before filing. Then it annualizes that figure. Next, it compares that number against Arizona’s median income for a household of the same size, published periodically by the U.S. Trustee Program. If income falls at or below the median, the filer generally passes and can proceed under Chapter 7 without further calculation.
Step two: the deeper calculation
Income above the median doesn’t disqualify a filer outright. Instead, it triggers a second calculation. This step subtracts allowed expenses — using IRS-based standards for housing, transportation, and healthcare — from income to find disposable income. If what’s left over stays below a set threshold, Chapter 7 remains available. Above that threshold, the presumption shifts toward Chapter 13. Even then, a filer can rebut the presumption by documenting special circumstances the standard formula doesn’t capture.
Household size changes everything
Because the comparison runs against household size, the same income can pass for a family of four and fail for a single filer. Anyone unsure where they land should check the current median income table directly. The U.S. Trustee Program updates these figures periodically, and the numbers shift over time.
Why most filers never reach the second step
In practice, a large share of Chapter 7 filers clear the means test at step one. Their income simply sits below the median. The deeper disposable-income calculation mainly comes into play for higher earners carrying significant unsecured debt. That’s exactly the group Congress designed the test to screen more closely when lawmakers added it to the Chapter 7 vs Chapter 13 decision back in 2005.
The bottom line
The Arizona bankruptcy means test starts with a simple income-to-median comparison, and most filers pass right there. Only those above the median move to a second, more detailed calculation of disposable income. Either way, the numbers used in the comparison are public. They’re worth checking directly before assuming which chapter applies.
Frequently asked questions
It compares a filer’s average income over the prior six months against Arizona’s median income for the same household size.
It triggers a second calculation of disposable income after allowed expenses, which decides whether Chapter 7 is still available.
Yes. The median income threshold is set by household size, so the same income can pass for a larger household and fail for a smaller one.
Sometimes. A filer can rebut the Chapter 13 presumption by documenting special circumstances the standard formula doesn’t account for.
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This article explains Arizona’s general bankruptcy means test. It is general information, not legal advice. Individual results depend on actual income and expenses — confirm with a qualified attorney.