The bankruptcy means test is a tool used to determine if a debtor is eligible to file for Chapter 7 bankruptcy, which is sometimes referred to as “liquidation” bankruptcy. The means test was introduced as part of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA) in an effort to prevent abuse of the bankruptcy system.
If you live in New Jersey and are considering filing for bankruptcy, it’s important to understand how the means test works and how it may impact your bankruptcy case.
How Does the Means Test Work?
The means test is a formula that compares your income to the median income in your state. If your income is below the median income, you may be eligible to file for Chapter 7 bankruptcy. If your income is above the median income, you may still be eligible to file for Chapter 7, but it will depend on a number of other factors, including your expenses and debts.
To determine your eligibility for Chapter 7 bankruptcy in New Jersey, you will need to complete the means test form, which requires you to provide information about your income, expenses, and debts. The form is designed to determine your disposable income, which is the amount of money you have left over each month after paying for your basic living expenses.
If your disposable income is below a certain threshold, you may be eligible to file for Chapter 7 bankruptcy. If your disposable income is above the threshold, you may still be eligible to file for Chapter 7, but you will need to demonstrate that you have “special circumstances” that justify your filing.
What is the Median Income in New Jersey?
The median income in New Jersey varies depending on the size of your household. As of April 2023, the median income for New Jersey is as follows:
| Household Size | Annual Income for Chapter 7 | Annual Income for Chapter 13 |
|---|---|---|
| 1 | $65,732 | $50,955 |
| 2 | $84,542 | $65,726 |
| 3 | $102,054 | $79,479 |
| 4 | $123,395 | $95,068 |
| 5 | $132,395 | $102,068 |
| 6 | $141,395 | $109,068 |
| 7 | $150,395 | $116,068 |
| 8 | $159,395 | $123,068 |
Note that these numbers are subject to change, so it’s always a good idea to consult with a bankruptcy attorney for the most up-to-date information and to determine your eligibility for bankruptcy. If you are thinking about filing bankruptcy, Karra Kingston can go through to determine if you qualify under the Means Test. She has helped many people get out of debt.