Failed the Bankruptcy Means Test in Arizona? Here’s What to Do Next
Written by Jim Gaudiosi
If you fail the Chapter 7 means test in Arizona, it doesn’t mean you’re out of options; your most powerful alternative is typically filing for Chapter 13 bankruptcy. Failing this test is a common hurdle for many people seeking debt relief, but it simply means your path to financial freedom needs a different strategy, one that an experienced attorney can help you navigate.
This article provides a clear action plan for what to do if you don’t pass the means test and explains how you can still achieve your financial goals.
First, What Does Failing the Means Test Actually Mean?
The bankruptcy means test is a calculation used to determine if an individual is eligible to file for Chapter 7 bankruptcy. Its main purpose is to see if someone has enough disposable income to repay a portion of their debts. If your household income is above Arizona’s median income for a family of your size, you must complete a complex calculation to see if you “pass.”
Failing the test creates a “presumption of abuse,” which means the court assumes you can afford to pay back some of your debt. This doesn’t mean you can’t file for bankruptcy. It simply redirects you from Chapter 7 (liquidation) toward Chapter 13 (reorganization), which is often a more suitable and powerful tool for those with regular income.
Your 4-Step Action Plan After Failing the Means Test
After learning you didn’t pass the means test, it’s important to take organized, strategic steps. Here is a clear plan to follow.
Step 1: Review the Means Test for Errors
The means test is a detailed and complex form. Even small errors can lead to an incorrect result. Common mistakes include using the wrong household size, miscalculating income from the past six months, or failing to include all allowable expenses. An experienced bankruptcy attorney can perform a professional review of your calculations to ensure everything was reported accurately. Sometimes, a simple correction is all that’s needed to pass.
Step 2: File for Chapter 13 Bankruptcy
For most people who fail the means test, Chapter 13 bankruptcy is the best path forward. Known as a “reorganization bankruptcy,” it allows you to consolidate your debts into a single, manageable payment over a three-to-five-year period.
The benefits of Chapter 13 include:
- Keep Your Property: You can protect your home, vehicles, and other valuable assets from foreclosure and repossession.
- Create a Manageable Plan: Your repayment plan is based on what you can realistically afford.
- Stop Creditor Harassment: Once you file, an “automatic stay” legally prohibits creditors from contacting you, suing you, or garnishing your wages.
- Discharge Remaining Debt: At the successful completion of your plan, any remaining eligible unsecured debt (like credit card bills and medical debt) is discharged forever.
Step 3: Re-Evaluate and Wait (If Your Situation Is Temporary)
The means test looks at your average income over the six months before you file. If you failed because of a temporary income spike—such as a one-time bonus, a short-term project, or seasonal work—that income may not reflect your current financial reality.
If you expect your income to decrease and remain lower, waiting a few months before filing could be a viable strategy. When your six-month average income drops below the median level, you may be able to pass the test and qualify for Chapter 7.
Step 4: Explore Non-Bankruptcy Alternatives
While bankruptcy is a powerful legal tool, other options exist, such as debt negotiation with creditors or debt consolidation programs. However, these alternatives are often less comprehensive. They typically do not offer the legal protection of the automatic stay, and they may not be able to reduce the principal amount you owe. For individuals with significant debt, bankruptcy usually provides a more complete and final solution.
The Exception: Do You Have “Special Circumstances”?
In some cases, you can still qualify for Chapter 7 even if you fail the means test. The law allows you to rebut the “presumption of abuse” by demonstrating special circumstances. This means you have unavoidable expenses or a change in your financial situation that isn’t accurately reflected in the standard means test calculation.
Examples of special circumstances may include:
- A serious medical condition requiring costly care
- A recent job loss or significant reduction in income that occurred after you filed
- Being called to active military duty
- Other necessary expenses that leave you with no disposable income
Proving special circumstances requires extensive documentation and a strong legal argument. This is an area where the guidance of a qualified bankruptcy lawyer is essential.
Why an Arizona Bankruptcy Lawyer is Crucial
Navigating the complexities of the means test and choosing the right path forward requires specialized knowledge. An Arizona-based bankruptcy attorney provides critical advantages.
Local Knowledge is Key. The means test relies on data specific to your state. An attorney who practices in Arizona will be intimately familiar with the current median income levels, local expense standards, and courtroom procedures of the District of Arizona.
Arizona Means Test Data: As of 2025, the median income for a two-person household in Arizona is approximately $84,149. This figure, set by the U.S. Trustee Program, changes periodically and is a key factor in your case. An attorney uses this official data to assess your options accurately.
The legal team at Gaudiosilaw has years of experience helping Arizonans successfully navigate this exact situation. Whether it’s through a detailed review of your means test, a strategic Chapter 13 filing, or arguing special circumstances, we are equipped to find the best solution for you.
Don’t let a failed means test discourage you. A fresh start is still within reach. Contact Gaudiosilaw for a free, confidential consultation to discuss your case and get on the road to financial recovery.
