Purposeful Advocacy for New Jersey
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What Is the Bankruptcy Means Test?

Individuals who feel as though they are facing debt that they will never be able to repay may want to consider filing for bankruptcy. There are two primary options for consumer bankruptcy: Chapter 7 and Chapter 13. In order for a debtor to determine which type of bankruptcy they are eligible for, they will need to take a means test. The means test will determine whether the debtor has a household income that is higher than the median for the county in which they reside. For example, in Middlesex County, New Jersey, the median household income in 2016 was $80,716. Individuals that wish to file bankruptcy in Middlesex County that have a household income less than that will be eligible to file Chapter 7 bankruptcy. If the individual’s household income is greater, they will have to file Chapter 13 bankruptcy.

A chapter 7 bankruptcy requires the debtor to liquidate their assets into cash in order to pay back some debts to creditors. A chapter 13 bankruptcy, on the other hand, allows debtors to reorganize their debt, come up with a payment plan over 3 to 5 years, and then discharge the other debts that are still remaining. If you are struggling to pay outstanding debt, contact our firm today to see how bankruptcy may benefit you.

Juan C. Velasco, Esq. is a trusted attorney who concentrates on bankruptcy, family law, real estate, and estate matters who has been serving the New Jersey area for over 25 years. If you are in need of experienced legal counsel, please contact Velasco Law Office and we will be happy to assist you.