Understanding the bankruptcy means test

Unless you have previously filed for bankruptcy in New Jersey, you may have lots of questions about the process and what type of bankruptcy filing might be right for you. At Goldman & Beslow, LLC, we understand that, ultimately, whether you will be able to move forward with a Chapter 7 bankruptcy filing will depend on how you fare on what is known on the bankruptcy means test.

According to NerdWallet, the bankruptcy means test takes into account certain areas of your finances to determine whether you can, in fact, move ahead with a Chapter 7 bankruptcy. If you do not end up passing the bankruptcy means test, you can consider taking a number of different steps, among them filing for a Chapter 13 bankruptcy or waiting six months and then trying to pass the test again.

So, what can you expect when taking the bankruptcy means test? First, you will need to review your monthly household income against that of the median household in the state of New Jersey. If yours is lower, then you can automatically move forward with a Chapter 7 bankruptcy filing. If your monthly household income is higher than the median household income in New Jersey, though, and you still wish to pursue a Chapter 7 bankruptcy, you will need to try to pass the second part of the means test.

The second part of the means test involves providing comprehensive documentation about your monthly expenses so that you can see how much money you have left after paying for necessities. This figure represents your “disposable income,” and how much disposable income you have will ultimately determine whether you can pass the bankruptcy means test. You can find more about filing for bankruptcy on our webpage.

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