Oregon Bankruptcy Means Test Figures for 2026

If you are thinking about filing Chapter 7 bankruptcy in Oregon, the starting point is determining your average income over the previous six months. This calculation is required under the Bankruptcy Means Test, which establishes your Current Monthly Income (CMI) and is then compared to Oregon’s median income for households of the same size.

Falling below the median generally allows a debtor to proceed under Chapter 7, but the Means Test is only one part of the eligibility analysis. Even when a debtor qualifies under the income threshold, Chapter 7 is not automatically the right chapter to file. Disposable income, secured debt arrearages, and the value of non‑exempt property all play a significant role in determining the best path forward.

By Alexander Hernandez, J.D., Professor, and Author of Consumer Bankruptcy Law (Routledge).

Key Points About the Oregon Means Test

• Six‑Month Income Review: The Means Test uses the average of all income received during the six months before filing. This figure determines whether a debtor must complete the second stage of the Means Test.
• Timing Matters: A single unusually high‑earning month, such as a bonus, overtime spike, or commission, can inflate the six‑month average. In some cases, waiting for that month to fall outside the look‑back period may be necessary.
• Presumption of Abuse: If your annualized income exceeds Oregon’s median income, a “presumption of abuse” arises under 11 U.S.C. §707(b). This triggers the second portion of the Means Test, which allows additional deductions and may still result in Chapter 7 eligibility.
• Considering Chapter 13: Even when a debtor passes the Means Test, Chapter 13 may be strategically superior, especially when curing mortgage arrears, stopping vehicle repossessions, or restructuring secured debts.

How the Means Test Works in Oregon

The first step is completing Official Form 122A‑1, which calculates CMI under 11 U.S.C. §101(10A). The form annualizes your six‑month income and compares it to Oregon’s median income for your household size.

For example, if you earned $36,000 over the six months before filing, dividing by six yields a CMI of $6,000. Annualizing that amount results in $72,000. That figure is then compared to Oregon’s median income for your household size.

If your annualized income is at or below Oregon’s median income, you are not required to complete the second stage of the Means Test. However, passing Step 1 does not automatically make Chapter 7 the best choice. Debtors must still evaluate:

• The fair market value of all assets.
• Oregon exemption protections.
• Disposable income on Schedules I (Income) and J (Expenses).

If your income exceeds Oregon’s median, you must complete Official Form 122A‑2, which applies IRS National and Local Standards for expenses, along with deductions for secured debt payments such as mortgages and vehicle loans. These deductions often reduce disposable income enough to eliminate the presumption of abuse.

Failing the Means Test and What It Means

Form 122A‑2 is detailed and incorporates standardized expense allowances, housing and transportation deductions, and secured debt payments. Many debtors who initially appear to “fail” the Means Test ultimately qualify for Chapter 7 once these deductions are applied.

Regardless of whether you pass under Step 1 or Step 2, the Means Test is not the final determinant. Chapter choice must also consider arrears, asset protection, and long‑term financial goals.

Oregon Median Income Figures for 2026

Household Size	Annual Median Income	Monthly Median Income
1 Earner	$79,089	$6,590.75
2 Persons	$93,670	$7,805.83
3 Persons	$116,729	$9,727.41
4 Persons	$140,024	$11,668.66

Choosing Between Chapter 7 and Chapter 13 When Facing Foreclosure or Repossession

Chapter 7 does not provide an option to cure missed mortgage or vehicle payments. Debtors who are behind on secured debts risk losing the asset unless they can immediately bring payments current.

Many self‑represented filers mistakenly believe the automatic stay permanently stops foreclosure or repossession. In reality, creditors may request relief from the stay, and courts routinely grant those motions when arrears exist.

Chapter 13, by contrast, allows you to catch up on missed mortgage or car payments by spreading out the arrears over a 36-60 month period, but you have to continue to make your regular payments.

Reducing Your Car Loan Balance

A vehicle loan balance may be reduced to the car’s present fair market value through what bankruptcy law refers to as a cramdown. Under §506(a), a secured claim is only secured to the extent of the vehicle’s value, meaning the creditor’s secured interest is limited to what the vehicle is actually worth today. But two requirements must be met before a cramdown is permitted.

The first requirement is the 910‑day rule found in §1325(a). To qualify for a cramdown, you must have owned the vehicle for at least 910 days. The second requirement is the ability to pay the secured portion of the loan, the vehicle’s fair market value, over the duration of the Chapter 13 plan.

To illustrate how this works, consider a debtor who owes $22,000 on a vehicle that is now worth $12,000, and who purchased the car more than 910 days before filing. In a Chapter 13 cramdown, the creditor’s secured claim would be limited to $12,000, which is paid in full over the life of the plan, often at a reduced interest rate, known as the Till rate.

The remaining $10,000 becomes an unsecured claim and is treated the same as credit cards, medical bills, and other unsecured debts. Once the plan is completed, the car is paid off, resulting in substantial savings for vehicles that have significantly depreciated.

Reducing Second Mortgages and HELOCs

Lien stripping is similar to the cramdown, but applies to mortgages or HELOCs under Sections 506(a) and 1322(b)(2). When a home’s fair market value is less than the balance of the first mortgage, any junior lien, such as a second mortgage or HELOC, may be treated as entirely unsecured.

Under §506(a), the lien is valued at zero because there is no remaining equity to secure it. Under §1322(b)(2), the second mortgage can be stripped and paid as unsecured debt. Upon successful plan completion, the lien is removed from the property.

This is one of the most powerful tools available in Chapter 13. The cramdown and lien stripping are not permitted in Chapter 7.

When to File Your Oregon Bankruptcy Case

Because the Means Test averages income over six months, timing is critical. A one‑time bonus, overtime surge, or extra pay period can push a debtor above Oregon’s median income. In those situations, delaying the filing until the high‑income month drops out of the six‑month window may restore eligibility for Chapter 7.

For example, if a high‑earning month occurred four months ago, waiting three additional months ensures that month is excluded from the Means Test calculation.

Conclusion

Passing the Oregon Means Test is necessary to qualify for Chapter 7, but it is not the sole factor in determining the best chapter to file. Debtors must evaluate asset values, Oregon exemption protections, disposable income, and whether they are behind on secured debts. For many individuals seeking to save a home or vehicle, Chapter 13 remains the more effective option.

Educational Resources

• For Institutions: Colleges and universities may request examination copies of my textbook directly from Routledge Publishing.
• For Students & Practitioners: Single print and digital copies are available via Amazon Books.
• Video Lectures: Stream comprehensive legal breakdowns and video explanations on the Bankruptcy.blog YouTube Channel.

Bankruptcy Court & Consumer Resources

Explore additional consumer guides and state-specific directories to navigate your legal options:

• A step-by-step master guide to completing and understanding the bankruptcy petition.
• Bankruptcy Court Directory: Full listings for the federal bankruptcy court system and trustee contact information.
• State Bankruptcy Exemptions: Review your state‑specific exemptions or compare them with the federal exemptions.
• 341 Meeting Procedures: Prepare for your court date with updated rules, expectations, and practical guidance.

Please note that the information on this site does not constitute legal advice and should be considered for informational purposes only.

Bankruptcy Code Statutory References

• 11 U.S. Code §707 – Dismissal of a case or conversion to a case under chapter 11 or 13.
• Official Form 122A-1. Chapter 7 Statement of Your Current Monthly Income.
• Official Form 122A-2. Chapter 7 Means Test Calculation.
• 11 U.S. Code §101 – Definitions.
• 11 U.S. Code §341 – Meetings of creditors and equity security holders.
• 11 U.S. Code §506 – Determination of secured status.
• 11 U.S. Code §1325 – Confirmation of plan.
• 11 U.S. Code §1322 – Contents of plan.