What Is The Bankruptcy Means Test?
The cost of living in New York and New Jersey is so high. If you have fallen behind on your bills and creditors are harassing you, don’t feel bad. Thousands of people file for bankruptcy in New Jersey and New York each year. To determine if you qualify for bankruptcy, you will need to pass the Means Test. The Means Test, was enacted by Congress to stop people from filing fraudulent bankruptcy petitions. The Means Test determines what chapter of bankruptcy you qualify for based on your household income and size. People who make “too” much money to qualify under the Means Test have to pay back a certain portion of their debts under a Chapter 13 bankruptcy. If your income falls under the Means Test for your State, then you qualify for a Chapter 7 bankruptcy and you may be able to get your debts eliminated. We will take a more in depth look at the Means Test below.
A bankruptcy lawyer can help determine if you qualify under the Means Test. They May know of expenses that you have forgotten”
How Do You Qualify Under The Means Test?
The Means Test takes a look at your income and household size to determine if you qualify for a Chapter 7 bankruptcy. It is important to note, if your debt is primarily non-consumer debt (ie.business debt) then you do not need to qualify under the Means Test to file a Chapter 7 bankruptcy.
The Means Test is calculated by taking your household income and family size, and comparing it with your state’s household income and family size. If your under your state’s household income for a similar size family then you automatically qualify for a Chapter 7 bankruptcy. If you don’t qualify, don’t get too upset yet! You will need to go to the second part of the Means Test which will look at your household monthly expenses and determine how much disposable income you have left over to pay your debts.
An experienced bankruptcy lawyer can go through the process of making sure you have included all of your allowable expenses on your Means Test calculation. It is important to understand that credit card payments and student loans payments do not count as monthly expenses on the Means Test. Further, not all expenses are deductible. The Court only allows reasonable monthly expenses. If your disposable income is too high then you will need to file a Chapter 13 bankruptcy instead, of a Chapter 7 bankruptcy. If you have too much disposable income left over, the Court will want you to pay a portion back to your creditors in a monthly payment plan.
New York and New Jersey have different Median incomes. Speaking with a bankruptcy lawyer is the best way to go through your expenses to make sure that you have included all of your allowable expenses on the Means Test. Our bankruptcy lawyers can help you determine if you qualify under the Means Test.
What Happens If I Pass the Means Test
Passing the Means Test, does not mean you should automatically file for bankruptcy. If you have assets you will need to make sure that your assets are protected under the bankruptcy you are filing. There are certain exemptions that allow you to keep your property. If you file the wrong chapter of bankruptcy and don’t use the correct exemptions, you can risk losing your property. It is best to make sure that you speak with a bankruptcy lawyer before filing a case.
Speak With a Lawyer Who Can Help Determine if You Can Pass the Means Test
Our experienced New York and New Jersey bankruptcy lawyers will determine if you qualify for bankruptcy relief. Our lawyers have helped hundreds of people determine if they qualify for bankruptcy under the Means Test. Our bankruptcy lawyers understand that the bankruptcy process can seem long and complicated. Our lawyers want to make this as stressless as possible. Call our office today for a free consultation. We will help you calculate and determine if you qualify for bankruptcy.