Does SSDI Count as Income for the Bankruptcy Means Test Median Income Calculation?
If you receive Social Security Disability Insurance (SSDI) and are considering filing for bankruptcy, one of the first questions you'll face is whether your disability benefits count toward the median income threshold used in the bankruptcy means test. The answer shapes which chapter of bankruptcy you can file — and it's not as straightforward as it might seem.
What the Bankruptcy Means Test Actually Measures
When you file for Chapter 7 bankruptcy, the court uses a two-step means test to determine whether you're eligible. The first step compares your current monthly income (CMI) — averaged over the six months before filing — to the median income for a household your size in your state.
If your income falls below the state median, you generally pass the first step and can proceed with Chapter 7 without completing the full means test. If it falls above, you move to a more detailed calculation to see whether you have disposable income that could repay creditors, which may push you toward Chapter 13 instead.
The critical question, then, is what counts as "current monthly income" under bankruptcy law — and that's where SSDI becomes complicated.
How Bankruptcy Law Defines "Current Monthly Income"
Federal bankruptcy law (11 U.S.C. § 101(10A)) defines current monthly income broadly: it includes most regular income you've received over the six months prior to filing. This includes wages, rental income, business income, and — in most interpretations — Social Security Disability Insurance payments.
This is a key distinction worth understanding clearly:
| Income Type | Generally Included in CMI? |
|---|---|
| SSDI benefits | Yes, under most court interpretations |
| SSI (Supplemental Security Income) | No — explicitly excluded by statute |
| Regular Social Security retirement | Excluded in some courts, included in others |
| Wages | Yes |
| Pension income | Yes |
SSI is explicitly excluded from the means test calculation by the same federal statute. SSI and SSDI are two separate programs. SSI is need-based and funded by general tax revenues. SSDI is an insurance program tied to your work history and Social Security credits. That program distinction matters directly here.
Because SSDI is not specifically excluded the way SSI is, most bankruptcy courts treat SSDI as part of current monthly income for purposes of comparing your income to the state median.
📋 Why This Distinction Matters Practically
If your SSDI benefit — combined with any other income — pushes your household income above your state's median, you don't automatically lose Chapter 7 eligibility. You move to the second part of the means test, which calculates allowable expenses and disposable income. Many SSDI recipients still qualify for Chapter 7 even if they clear the median threshold, because their allowable expenses consume most of their income.
However, if your total income including SSDI falls below the state median, the process is simpler and faster. You pass the first step without going through the full expense analysis.
State median income figures are updated periodically by the U.S. Trustee Program, so the threshold you're compared against depends on when you file, your state, and your household size.
Variables That Shape Individual Outcomes 🔍
Several factors determine how SSDI interacts with your specific bankruptcy situation:
- Your total monthly income — SSDI alone, or combined with a spouse's income or part-time work
- Household size — Median income thresholds scale with the number of people in your household
- Your state — Median income varies significantly by state
- Which bankruptcy chapter you're considering — Chapter 7 vs. Chapter 13 have different income rules
- Timing of your filing — The six-month lookback period means recent income changes matter
- Whether you have a co-debtor or joint filer — A spouse's income is typically included in the household calculation
- Any work income — SSDI recipients who work within the Substantial Gainful Activity (SGA) threshold may still have some earned income that also factors in
The SGA threshold (the monthly earnings ceiling above which SSA considers you capable of substantial work) adjusts annually and is separate from bankruptcy means test calculations — but any earnings you do have will count toward your CMI alongside your SSDI.
How Different Profiles Play Out
A single individual receiving only SSDI with no other income will typically have a relatively straightforward means test calculation. Whether they fall below or above the state median depends on their benefit amount and their state. SSDI benefits are based on your lifetime earnings record and vary considerably — the average benefit in recent years has been in the range of $1,200–$1,600/month, though individual amounts vary and adjust annually with cost-of-living adjustments (COLAs).
A household where one spouse receives SSDI and the other works faces a more complex calculation, since both income streams typically enter the CMI. That combined figure could more easily exceed a state median threshold, triggering the full means test analysis.
A person who receives both SSDI and SSI would include only the SSDI portion in the CMI calculation — the SSI portion remains excluded.
The Part Only Your Situation Can Answer
Understanding that SSDI is generally included in the means test, while SSI is not, gives you the framework. But whether your specific income — in your state, for your household size, at the time you file — lands above or below the median, and what that means for your chapter options, depends entirely on numbers and circumstances that vary from person to person.
That's not a gap this article can close. It's a gap your specific filing situation fills in.
