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If you are living in Omaha or anywhere in Nebraska and find yourself buried under credit card debt or medical bills, you may be looking for a fresh start. Chapter 7 bankruptcy is often the first choice for many because it can wipe away most of your debt in just a few months. However, the law requires you to pass a specific "Means Test" to prove that you truly do not have the money to pay back what you owe. This test can feel like a complicated math problem, but it is actually based on a few key factors about your life and finances.
If you are feeling overwhelmed by debt and aren't sure if you qualify for help, don't face the confusion alone. Contact Lentz Law, PC, LLO today at (402) 526-5540 or fill out our online contact form for a compassionate evaluation of your situation. We are here to help you navigate the process with confidence and clarity.
Your Average Monthly Income
The first and most important part of the means test is calculating your income. The court doesn't just look at what you are making today; it looks at your average gross income over the last full six months. This includes almost every penny that comes into your household, such as wages, business income, rental income, and even help from family members.
In Nebraska, if your average income is lower than the state's median income for a household of your size, you generally pass the test immediately. As of April 1, 2026, the median income limits for Nebraska are:
- 1 Person Household: $66,922
- 2 Person Household: $90,728
- 3 Person Household: $103,405
- 4 Person Household: $125,074
If you are below these numbers, you likely qualify for Chapter 7 bankruptcy without having to do any more complicated math.
Your Household Size
Your household size is a major factor because the more people you support, the higher your income is allowed to be. For the purposes of the means test, your household usually includes anyone who lives with you and depends on your income for support. This includes children, a spouse, and, sometimes, elderly parents or other relatives.
It is important to get this number right because the income limits change significantly for every additional person. If you are supporting a large family in Omaha, you may pass the test even if your income seems high compared to that of a single person.
Necessary Living Expenses
If your income is higher than the Nebraska median, you don't have to give up. The second part of the means test allows you to subtract certain "allowable expenses" from your income. These are costs the court agrees you must pay to survive. After you subtract these, the court looks at what is left—your "disposable income." If that number is low enough, you can still pass the test.
Allowable expenses usually fall into two categories:
- National and Local Standards: The IRS sets standard amounts for things like food, clothing, and utilities based on where you live.
- Actual Expenses: You can often deduct the actual amount you pay for things like health insurance, child care, and taxes.
Secured Debt Payments
Another key factor in passing the means test is how much you pay for "secured" debts. These are loans backed by property, like your home mortgage or your car payment. The court understands that you need a place to live and a way to get to work.
When you are filling out the means test, you are often allowed to deduct these payments from your income calculation. For many people in Nebraska with high incomes and high mortgages, these deductions are what finally allow them to pass the test and qualify for debt relief.
Tax Obligations and Mandatory Deductions
Your tax situation also plays a big role in the means test. The court considers your gross income, but it allows you to deduct the taxes you are legally required to pay. This includes federal and state income taxes, as well as Social Security and Medicare taxes.
Other mandatory deductions that can help you pass include:
- Court-ordered payments, such as child support or alimony.
- Mandatory retirement contributions required by your employer.
- Union dues.
- Term life insurance premiums.
What If You Don't Pass?
If your income is still considered too high after all these deductions, it means you have "failed" the means test for Chapter 7. This is not the end of the road. It simply means the court believes you have enough money to pay back a portion of your debt over time.
In this case, most people in Omaha look into Chapter 13 bankruptcy. This option allows you to set up a repayment plan lasting 3 to 5 years. It still offers protection from creditors and can stop foreclosures or repossessions, giving you a structured path toward financial stability.
Why Professional Guidance Matters in Nebraska
The means test is a federal requirement, but the data used—such as median income and the local cost of living—are specific to Nebraska. One small mistake in calculating your six-month average or missing a deduction can lead to your case being rejected. Having a clear understanding of the bankruptcy process ensures that you aren't leaving money on the table or filing the wrong paperwork.
By looking at your unique financial picture, you can determine which path is best for your future. Whether you qualify for a total discharge or a repayment plan, the goal is the same: to stop the stress and start building a better life.
Contact Lentz Law, PC, LLO for Help With the Means Test
Navigating the rules of bankruptcy can feel like a full-time job, but you don't have to do it alone. At Lentz Law, PC, LLO, we focus on helping people throughout Omaha and Nebraska find the best solutions for their debt. We will sit down with you, review your income and expenses, and help you understand exactly where you stand on the means test.
If you are ready to take the first step toward a debt-free life, we are ready to help. Contact Lentz Law, PC, LLO at (402) 526-5540 or visit our contact page to schedule a consultation. Let us help you find the fresh start you deserve.