South Carolina Bankruptcy Means Test Figures for 2026

If you are considering Chapter 7 bankruptcy in South Carolina, the first step is calculating your average income during the six months before filing. This figure, known as Current Monthly Income (CMI), is determined through the Bankruptcy Means Test and compared to South Carolina’s median income for a household of your size.

Generally, individuals and families with income below the applicable median income qualify for Chapter 7 relief, but the Means Test is only one part of the eligibility analysis. Even if your CMI falls below South Carolina’s median income, Chapter 7 is not automatically the best option.

Factors such as disposable income, the status of secured debt payments, and the value of any non-exempt assets that could be liquidated by the bankruptcy trustee may influence whether Chapter 7 or Chapter 13 provides the better path to debt relief.

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

Key Points About the South Carolina Means Test

• Six Months of Income: The Bankruptcy Means Test uses the average income you received during the six calendar months before filing bankruptcy. This calculation determines whether you initially qualify for Chapter 7 under the Means Test.
• Presumption of Abuse: If your income exceeds South Carolina’s median income for your household size, a “presumption of abuse” may arise under 11 U.S.C. §707(b), resulting in completing the second portion of the Means Test, which allows additional deductions and expenses that may still qualify you for Chapter 7 relief.
• Filing Strategy: One month of increased income may push you past South Carolina’s median income. Waiting until that higher-income month falls outside the six-month lookback period can improve your eligibility for Chapter 7.
• Chapter 13 Benefits: Passing the Means Test does not automatically mean Chapter 7 is the best choice. Chapter 13 may help you catch up on mortgage arrears, vehicle payments, and tax obligations.

How the Means Test Works in South Carolina

The Bankruptcy 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 bankruptcy, annualizes that amount, and compares it to South Carolina’s median income for a household of the same size.

For example, if you earned $30,000 during the six-month lookback period, your CMI would be $5,000 per month, or $60,000 annually. That annualized income is then compared to South Carolina’s median income for your household size. If your annualized income is at or below the South Carolina median, you are not required to complete the second stage of the Means Test.

However, satisfying the first part of the Means Test does not automatically mean Chapter 7 is the best chapter to file. The fair market value of your assets must still be evaluated and compared to available South Carolina bankruptcy exemptions. In addition, your income and expenses for the month of filing are analyzed through Schedules I (Income) and J (Expenses) to determine your actual disposable income.

If your income exceeds South Carolina’s median income, you must complete Official Form 122A-2. This portion of the Means Test applies IRS National and Local Standards for allowable living expenses, along with deductions for secured debt payments such as mortgages and vehicle loans. These deductions often reduce disposable income sufficiently to overcome a presumption of abuse and still qualify for Chapter 7 relief.

Failing the Means Test and What It Means

Official Form 122A-2 is a detailed calculation that incorporates IRS-standard expense allowances, housing and transportation deductions, and payments on secured debts such as mortgages and vehicle loans. As a result, many individuals who initially appear to fail the Means Test based on income alone ultimately qualify for Chapter 7 after these deductions are applied.

Even if a presumption of abuse arises under the Means Test, that does not automatically prevent a Chapter 7 filing. The final outcome depends on the complete financial analysis reflected in Form 122A-2 and the deductions permitted under the Bankruptcy Code.

Whether you qualify under the first or second stage of the Means Test, bankruptcy chapter selection should not be based on income alone. Important considerations include mortgage or vehicle payment arrears, the amount of equity in your assets after applying South Carolina bankruptcy exemptions, your ability to protect property from liquidation, and your long-term financial goals.

In many cases, Chapter 13 provides benefits that Chapter 7 cannot, particularly for debtors seeking to save a home from foreclosure or catch up on secured debt payments over time.

South Carolina Median Income Figures for 2026

Household Size	Annual Median Income	Monthly Median Income
1 Earner	$64,808	$5,400.66
2 Persons	$83,761	$6,980.08
3 Persons	$95,672	$7,972.66
4 Persons	$116,314	$9,692.83

Choosing the Right Bankruptcy Chapter to Save Your Home or Vehicle

If you are behind on your mortgage or car loan, the type of bankruptcy you file can have a significant impact on whether you can keep the property. While both Chapter 7 and Chapter 13 provide the protection of the automatic stay, they serve very different purposes when it comes to dealing with secured debt.

In a South Carolina Chapter 7 case, bankruptcy can temporarily stop a foreclosure sale or repossession effort. However, Chapter 7 does not provide a method for repaying missed mortgage or vehicle payments over time. If you cannot quickly resolve the delinquency, the lender may ask the bankruptcy court for permission to continue collection efforts against the property by filing a motion for relief of stay.

Chapter 13 is often a better option for individuals who need time to catch up on missed payments. Through a court-approved repayment plan lasting three to five years, past-due amounts can be spread out over time while you continue making your regular monthly payments. This structure frequently allows South Carolina debtors to stop a foreclosure or repossession and retain important assets that might otherwise be lost.

For many homeowners and vehicle owners, determining whether Chapter 7 or Chapter 13 is the better choice depends on income, budget, equity, and the amount of the payment arrearage. Understanding those factors before filing can help you select the bankruptcy chapter best suited to your financial goals.

Reducing Your Car Loan Balance Through a Chapter 13 Cramdown

One of the most valuable features of Chapter 13 bankruptcy is the ability to reduce certain vehicle loans through a process commonly known as a “cramdown.” Under Section 506(a), a creditor’s secured claim is limited to the current value of the collateral securing the debt. As a result, when a vehicle has depreciated significantly, a portion of the loan balance may be reclassified as unsecured debt.

However, not every vehicle loan qualifies. The most important limitation is the 910-day rule contained in §1325(a). In general, the debtor must have purchased the vehicle more than 910 days before filing bankruptcy. If the vehicle was acquired within that period, the loan balance typically cannot be reduced through a cramdown.

When the requirements are satisfied, Chapter 13 can provide substantial savings. For example, suppose a South Carolina debtor owes $25,000 on a vehicle that now has a fair market value of only $12,000. Because §506(a) limits the secured claim to the value of the collateral, only $12,000 is treated as secured debt. That amount must be paid through the Chapter 13 plan, often at a reduced interest rate determined under the Till formula.

The remaining $13,000 is generally treated as an unsecured claim. Like credit card balances, medical debt, personal loans, and other unsecured obligations, that portion of the debt may receive only partial repayment through the bankruptcy plan.

Upon successful completion of the Chapter 13 plan, the vehicle loan is satisfied, often resulting in significant savings for debtors who owe far more than the vehicle is worth.

Stripping Second Mortgages and HELOCs in Chapter 13 Bankruptcy

Chapter 13 bankruptcy provides another powerful debt-relief tool known as lien stripping, which may allow a South Carolina debtor to eliminate a second mortgage or Home Equity Line of Credit (HELOC) when there is insufficient equity in the property. This relief is based primarily on Sections 506(a) and 1322(b)(2).

Under §506(a), a creditor holds a secured claim only to the extent that value exists in the collateral. When the fair market value of a home is less than the balance owed on the first mortgage, there may be no equity remaining to secure a junior lien. In that situation, the second mortgage or HELOC may be treated as entirely unsecured.

Once the junior lien is determined to be wholly unsecured under §506(a), §1322(b)(2) permits the lien to be stripped and treated as unsecured debt through the Chapter 13 plan. Unlike a vehicle cramdown, the debtor is not required to pay the full amount of either mortgage through the repayment plan. Instead, the stripped lien is generally paid the same percentage as other unsecured creditors, which is often determined by the value of non-exempt assets under the Liquidation Test.

For example, if a South Carolina homeowner owes $250,000 on a first mortgage and the property is worth only $240,000, a second mortgage or HELOC may have no collateral value supporting the lien. In many Chapter 13 cases, that junior mortgage can be reclassified as unsecured debt and discharged upon successful completion of the repayment plan.

Lien stripping is widely regarded as one of the most valuable benefits available under Chapter 13, especially since it is unavailable in Chapter 7 bankruptcy.

When to File Your Bankruptcy Case

Because the Means Test averages income over six months, timing is critical. A one-month surge in income could result in exceeding the South Carolina median income. However, if that happens, 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 three months ago, waiting four additional months ensures that month is excluded from the Means Test calculation.

Conclusion

Passing the South Carolina Means Test is necessary to qualify for Chapter 7, but it is only one factor in determining the best chapter to file. You must evaluate the value of your assets, exemptions, compare Schedules I and J (disposable income), and be current 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 and Statutory

• 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.