Rhode Island Bankruptcy Means Test Figures for 2026

If you are considering Chapter 7 bankruptcy in Rhode Island, the first step is calculating your average income over the past six months. This figure, known as your Current Monthly Income (CMI), is established through the Bankruptcy Means Test and then compared to Rhode Island’s median income for a household of your size. Being below the median generally permits a Chapter 7 filing, but the Means Test is only one part of determining full eligibility.

Even if your CMI is below the income levels for Rhode Island, Chapter 7 is not automatically the right chapter to file. Your disposable income, being current on secured debt obligations, and the value of non‑exempt property subject to liquidation by the trustee all play a significant role in determining whether Chapter 7 or Chapter 13 is the best option.

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

Key Points About the Rhode Island Means Test

• Six‑Months of Income: The Means Test averages your income received six months before filing. This figure determines whether you initially pass the Means Test.
• Presumption of Abuse: If your income exceeds Rhode Island’s median income, a “presumption of abuse” arises under 11 U.S.C. §707(b), requiring the second portion of the Means Test, which allows additional deductions and may still result in qualifying for Chapter 7.
• Filing Strategy: One month with a bonus, overtime, or commission can push your income above Rhode Island’s median income. You may need to wait for that month to fall outside the six months.
• Chapter 13 Benefits: Even if you pass the Means Test, Chapter 13 may be the best option, especially if you have fallen behind on your mortgage or car payments.

How the Means Test Works in Rhode Island

The Means Test begins with Official Form 122A‑1, which calculates your Current Monthly Income (CMI) under 11 U.S.C. §101(10A). The form averages all income received during the six months before filing, annualizes that figure, and compares it to Rhode Island’s median income for a household of the same size.

For example, if you earned $36,000 during the six‑month look‑back period, your CMI is $6,000 monthly, or $72,000 annually. The figure is then compared to Rhode Island’s median income.

If your annualized income is at or below the state median, you are not required to complete the second stage of the Means Test. Still, clearing Step 1 does not automatically make Chapter 7 the optimal choice. The fair market value of all assets has to be determined, then compared to Rhode Island’s exemptions. As well as determining disposable income on Schedules I (Income) and Schedule J (Expenses).

If your income exceeds the Rhode Island median, you must complete Official Form 122A‑2, which applies IRS National and Local Standards for allowable expenses, along with deductions for secured debt payments such as mortgages and vehicle loans. These standardized deductions frequently reduce disposable income enough to avoid a 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 on mortgages and car payments, asset equity after applying the exemptions, and long‑term financial goals.

Rhode Island Median Income Figures for 2026

Household Size	Annual Median Income	Monthly Median Income
1 Earner	$79,653	$6,63775
2 Persons	$98,736	$8,228
3 Persons	$119,419	$9,951.58
4 Persons	$137,479	$11,456.58

Add $11,100 for each household member exceeding four.

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

Chapter 7 offers no mechanism to cure delinquent mortgage or vehicle payments. If you are already behind, the bankruptcy does not stop a lender from taking the property unless you can immediately bring all arrears current.

Many pro se filers mistakenly assume the automatic stay will freeze a foreclosure or repossession for the duration of the case. In reality, secured creditors routinely ask the court for permission to proceed, and judges generally grant those requests when there is no feasible way for the debtor to catch up.

Chapter 13 functions very differently. Past‑due mortgage or car payments can be folded into a three‑ to five‑year repayment plan, allowing you to cure the default over time. However, you must continue making your regular monthly payments during the plan to keep the home or vehicle.

Reducing Your Car Loan Balance with Chapter 13 Bankruptcy

Chapter 13 allows certain vehicle loans to be reduced to the car’s current fair market value through a cramdown. Under §506(a), a secured claim is secured only up to the value of the collateral, meaning the lender’s secured interest is limited to what the vehicle is worth today. Two conditions must be satisfied before a cramdown is available.

The first is the 910‑day rule in §1325(a), which requires that you have owned the vehicle for more than 910 days before filing. The second is the ability to pay the secured portion, the vehicle’s fair market value, over the length of the Chapter 13 plan.

For example, if a debtor owes $25,000 on a car now worth $12,000, and the purchase occurred more than 910 days before filing, the secured claim is reduced to $12,000. That amount is paid in full through the plan, typically at a lower interest rate known as the Till rate. The remaining $13,000 becomes an unsecured claim and is treated like credit cards, medical bills, and other unsecured debts.

Once the plan is completed, the vehicle is paid off, often producing substantial savings for cars that have significantly depreciated.

Reducing Second Mortgages and HELOCs with Chapter 13

Lien stripping is similar to the cramdown, but for mortgages or Home Equity Lines of Credit under Sections 506(a) and 1322(b)(2). When a home’s fair market value is less than the balance of the first mortgage, a second mortgage or HELOC will be converted to unsecured debt.

Under §506(a), the lien could be reduced to 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. Unlike the cramdown, with lien stripping, you don’t have to pay off the full amount of the first or second mortgage through the plan. The second mortgage will be paid a portion of your non-exempt assets based on the Liquidation Test.

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