Bankruptcy Means Test Austin: Three Households, One Cutoff

The bankruptcy means test Austin filers complete before a Chapter 7 case is an income calculation with a hard cutoff, and Austin’s wage levels push more households against it than in most of Texas. The test lives in 11 U.S.C. § 707(b). It compares a six-month income average to a statewide median, and for filers above that line it rebuilds the family budget from IRS tables rather than actual bills. The U.S. Trustee’s Austin office, on the second floor of the federal building on San Jacinto Boulevard, reviews every Chapter 7 case filed in the division for compliance. Rather than walk through the form line by line, this guide runs three Austin households through it. Each one shows a different way the arithmetic turns out. Each also shows a different reason the filing date matters.

The Numbers the Bankruptcy Means Test in Austin Starts From

Everything begins with current monthly income, defined in Section 101(10A) as the average of all income received in the six full calendar months before the month of filing. Wages, overtime, bonuses, self-employment profit, rental income, and a non-filing spouse’s earnings all count. Social Security benefits do not. That average, multiplied by twelve, is compared to the Texas median family income published by the U.S. Trustee Program. For cases filed on or after July 15, 2026, the figures are $66,837 for one person, $86,714 for two, $99,273 for three, and $117,962 for four. Each additional household member adds $11,100. A filer at or below the line passes on the first page. Section 707(b)(7) then bars anyone, including the trustee, from filing a motion claiming the case is abusive based on the calculation.

Household One: The Bonus in the Window

A single software engineer in East Austin earns a base salary just under the one-person median. In February she received an annual bonus equal to two months’ pay. If she files in June, the six-month window runs from December through May and captures the bonus. As a result, her annualized income lands above $66,837, and she moves to the second half of the form. If she files in September, the window runs from March through August. The bonus drops out, and she passes at step one.

Nothing about her finances changed between those two dates except the calendar. Notably, the Code permits that timing. What it does not permit is manipulating the income itself, such as deferring a paycheck. Section 707(b)(3) lets the court dismiss a case where the totality of the circumstances shows abuse, and a deliberately delayed paycheck is the kind of fact that invites that motion.

Household Two: The Spouse Who Is Not Filing

A couple in Pflugerville has three children. One spouse carries all the credit card debt and wants to file alone. The other spouse’s income still counts. Section 101(10A) includes amounts paid by any entity on a regular basis for the household expenses of the debtor, and a working spouse in the same home fits that description. However, the form does allow a marital adjustment. The filer may back out the portion of the non-filing spouse’s income that is not actually contributed to the household, such as that spouse’s own separate debt payments. Every dollar of that adjustment has to be documented.

With five people in the home, the comparison figure is $117,962 plus $11,100, or $129,062. Meanwhile, household size is where trustees most often push back. An adult child who lives at home but pays their own way may or may not count, and the answer affects the median line by $11,100.

Household Three: When the Bankruptcy Means Test in Austin Does Not Apply

A general contractor in South Austin personally guaranteed equipment leases and a line of credit for a company that failed. Those guarantees make up most of what he owes. Section 707(b) applies only to a debtor whose debts are primarily consumer debts, defined in Section 101(8) as debts incurred for personal, family, or household purposes. Business guarantees are not consumer debts. Consequently, if they exceed half of his total debt, the bankruptcy means test Austin trustees scrutinize does not apply to him at all, regardless of income. He still files the first page of the form to claim the exclusion. Similarly, the same section exempts disabled veterans whose debts arose during active duty and certain reservists on qualifying service. Everyone else, including the engineer and the couple above, completes the full calculation if they are over the median.

The Second Form: Where the Bankruptcy Means Test in Austin Uses IRS Tables

An above-median filer completes Official Form 122A-2. Section 707(b)(2)(A)(ii) requires expenses to come from the IRS National Standards for food, clothing, and personal items, and the Local Standards for housing, utilities, and transportation in Travis County. Actual rent above the local allowance does not count. In contrast, actual secured debt payments do, averaged over 60 months, along with priority debts like recent taxes and past-due support. Health insurance and court-ordered payments are allowed. What remains is monthly disposable income, multiplied by 60. Under $10,275, the filer passes. Over $17,150, the case is presumed abusive. In between, the presumption arises only if the amount would pay at least 25 percent of the filer’s unsecured debt. Section 707(b)(2)(B) lets the filer rebut the presumption with documented special circumstances, such as a serious medical condition, that leave no reasonable alternative.

Who Reviews the Result, and What Happens Next

Section 704(b)(1) gives the U.S. Trustee 10 days after the meeting of creditors to file a statement on whether the case is presumed abusive. That statement, and any motion to dismiss that follows, is the practical consequence of failing. Dismissal is not the only outcome, however. The court may convert the case to Chapter 13 with the filer’s consent. A filer who fails the test and still needs relief has Chapter 13 available, with a five-year commitment period under Section 1325(b)(4) because the income is above the median. The IRS-standard budget that failed the means test becomes the basis for the plan payment. Arizona filers run the same federal form against a different state median, as our guide to the Arizona bankruptcy means test shows.

The Bottom Line

The means test is arithmetic, and the arithmetic is the same in Austin as anywhere else in Texas. What differs, though, is the inputs. A bonus paid inside the six-month window, a spouse who earns but is not filing, a household member the trustee will not count, or a debt load that is mostly business rather than consumer can each flip the result. In other words, the statute measures a snapshot, and the filer chooses the day the snapshot is taken. That is the honest gap between the form and the case. The engineer who files in September and the engineer who files in June are the same person with the same debts, and only one of them qualifies for Chapter 7.

Keep reading: The Arizona Bankruptcy Means Test: How It Decides Which Chapter You Qualify For · Chapter 7 vs Chapter 13 Bankruptcy in Arizona: Which One Fits Your Situation

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This article is for general informational purposes only and does not constitute legal advice. Means test figures adjust periodically, and the calculation depends on individual income, household size, and expenses. Anyone considering bankruptcy should consult a licensed Texas bankruptcy attorney.

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