Puerto Rico Bankruptcy Means Test Figures for 2026

If you are considering filing Chapter 7 bankruptcy in Puerto Rico, the process starts with the Bankruptcy Means Test, which calculates your Current Monthly Income (CMI) over the prior six months. This figure is compared against Puerto Rico’s median income for your household size.

Falling below the median typically qualifies you to proceed, but income eligibility is only the first step. Even when you meet the threshold, evaluating disposable income, secured debt arrearages, and non-exempt property values is essential to determine if Chapter 7 is the right legal path forward.

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

Key Points About the Puerto Rico Means Test

• Prior Six‑Months of Income: The Means Test averages all sources of income received six months before filing. Exceeding the state average income requires completing the second stage of the Means Test.
• Presumption of Abuse: When your annualized income exceeds Puerto Rico’s median income, a presumption of abuse arises under 11 U.S.C. §707(b). This triggers the second stage of the Means Test, which permits additional deductions and can help you qualify for Chapter 7.
• When to File Your Bankruptcy Petition: A single high‑income month, whether from a bonus, overtime, or commission, can increase your six‑month average, causing you to exceed the state median. Delaying your filing might be necessary.
• Considering Chapter 13: Even if you pass the Means Test, Chapter 13 can still be the more advantageous option, whether to catch up on mortgage payments or avoid a vehicle repossession.

How the Means Test Works in Puerto Rico

The first step in determining whether you qualify for Chapter 7 bankruptcy is by completing Official Form 122A‑1, which calculates your last six months of income (Current Monthly Income) under 11 U.S.C. §101(10A). Your six months of income is then annualized and compared to Puerto Rico’s median income for your household size.

For example, if you earned $35,000 over the six months before filing, dividing by six yields a Current Monthly Income of $5,000. Annualizing that amount results in $70,000. That figure is then compared to Puerto Rico’s median income for your household size.

When your annualized income falls at or below Puerto Rico’s median income, you effectively pass the first stage of the Means Test and are not required to complete the second portion. But clearing Step 1 does not automatically make Chapter 7 the right option.

You still have to consider the fair market value of your assets, how Puerto Rico’s exemption laws apply to them, and whether your current monthly budget, which is reflected on Schedules I (Income) and J (Expenses), shows meaningful disposable income that could affect chapter choice.

When your income exceeds Puerto Rico’s median, you must complete Official Form 122A‑2. This stage of the Means Test applies the IRS National and Local Standards to your household expenses and also accounts for secured‑debt obligations like mortgages and vehicle loans.

In many cases, these deductions significantly reduce disposable income, eliminating the presumption of abuse and preserving Chapter 7 eligibility.

Failing the Means Test. Step Two

Form 122A‑2 is a detailed calculation that incorporates standardized expenses such as housing and transportation deductions, including secured‑debt payments. Many debtors who initially appear to fail the Means Test ultimately qualify for Chapter 7 once these deductions are applied.

If you pass the Means Test under Step 1 or Step 2, then your focus shifts to asset protection by valuating your assets and applying the Puerto Rico exemptions.

Puerto Rico Median Income Figures for 2026

Household Size	Annual Median Income	Monthly Median Income
1 Earner	$30,665	$2,555.41
2 Persons	$30,665	$2,555.41
3 Persons	$40,976	$3,414.67
4 Persons	$50,543	$4,2121.91

An additional $11,100 can be added for each member of the household exceeding four persons.

When to File Chapter 7 or Chapter 13

If you are facing foreclosure or a car repossession, Chapter 7 does not provide an option to catch up on missed mortgage or vehicle payments. By filing Chapter 7 on secured debt such as your car or home, you are at risk of losing the asset unless you can immediately bring payments current.

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.

A common mistake by self‑represented parties is believing the automatic stay permanently stops foreclosure or repossession. In reality, creditors may request relief from the stay, especially when a Chapter 7 is filed, and it’s clear that you are not keeping your car or home.

Reducing Your Car Loan Balance with Chapter 13

One of the benefits of Chapter 13 is that your car loan balance may be reduced to the car’s fair market value through what is known as a cramdown. Under §506(a) of the Bankruptcy Code, 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 new loan balance before completion of the Chapter 13 plan.

For instance, if you owe $25,000 on a vehicle but its fair market value is only $15,000, a cramdown would reduce the secured portion of the loan by $10,000. As long as the car was purchased more than 910 days before filing and your Chapter 13 plan shows you can repay the adjusted $15,000 balance, the cramdown is permitted. In addition, the interest rate is typically reduced, which is 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 or removed and paid as unsecured debt. Upon successful plan completion, the lien is removed from the property.

The cramdown and lien stripping are not permitted in Chapter 7, making Chapter 13 an option even when you qualify for Chapter 7.

When to File Your Puerto Rico Bankruptcy Case

Because the Means Test averages income over six months, timing can make a significant difference. A one‑time bonus, overtime spike, or extra pay period may temporarily push your income above Puerto Rico’s median. When that happens, waiting to file until the elevated month drops out of the six‑month window can restore Chapter 7 eligibility.

For instance, if the high‑income month occurred three months ago, waiting four more months ensures it is excluded from the Means Test calculation.

Conclusion

Passing the Puerto Rico Means Test is necessary to qualify for Chapter 7, but it doesn’t mean it is automatically the right choice. You must evaluate asset values, apply the Puerto Rico exemptions, compare Schedules I and J to determine disposable income, and be current on your secured debt payments.

Even if you meet the requirements of the Means Test, Chapter 13 might be the best option because of the cramdown and lien stripping, which could save you thousands of dollars.

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 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 §506 – Determination of secured status.
• 11 U.S. Code §1325 – Confirmation of plan.
• 11 U.S. Code §1322 – Contents of plan.