The Bankruptcy Means Test Calculator in New Jersey helps you estimate whether you qualify for Chapter 7 bankruptcy. The first part of the means test is based on your income relative to those in New Jersey and household size. The second part deals with your expenses.
When filing for bankruptcy in New Jersey, you may have to take the bankruptcy means test.
For Chapter 7, the means test determines whether or not you are eligible to apply. If you make over a certain amount, determined by New Jersey, you may not be allowed to file for Chapter 7 bankruptcy. The test will look at your current monthly income and it may not be higher than the state median income.
With Chapter 13 bankruptcy, the means test determines if you have enough monthly disposable income to make repayments each month to your unsecured creditors. It also can help determine if you are eligible for a 3-year or 5-year plan. With Chapter 13, there is not a maximum amount that you can make.
The means test in New Jersey looks at a few things. First, it considers what your monthly income is, and some incomes may be protected. We will cover that later. Next, your monthly expenses are considered. The test looks at your cost of living expenses, and other required monthly payments. Finally, the means test looks at the amount of debt an individual has. Considering all these things, the means test determines whether or not a person can make monthly payments into a repayment plan, should they be approved for bankruptcy.
If you live in New Jersey and are planning on filing for Chapter 7 or 13 bankruptcy, be sure to continue reading to see exactly what to expect when completing your means test.
Bankruptcy Means Test Calculator
If you are unsure as to whether or not you may qualify for a Chapter 7 or 13 bankruptcy, feel free to take our free bankruptcy means test calculator. The calculator was designed with you in mind and is based on the bankruptcy means test forms in New Jersey! We want to make sure you understand your eligibility, along with the other options that may be available to you based on your specific situation.
Once you take this test, you can see what forms of bankruptcy you may be eligible for, and compare what may be the best option for you.
New Jersey Income Limits
The bankruptcy means test income limits in New Jersey are updated every 6 months or so. The current numbers below are for cases filed on or after November 1, 2024 (source) which is valid in 2025. If you have a household size that is bigger than the maximum number below, you would just add $9,900 for each additional household member.
| # of People | Annual Income |
|---|
| 1 | $81,843 |
| 2 | $99,955 |
| 3 | $127,415 |
| 4 | $158,437 |
| 5 | $168,337 |
| 6 | $178,237 |
| 7 | $188,137 |
| 8 | $198,037 |
| 9 | $207,937 |
Bankruptcy Means Test Explanation
As mentioned earlier, the means test is a document you will fill out at the beginning of your bankruptcy filing process that determines your eligibility and repayment plan for bankruptcy. You will need to report a few things to fill out this form. The first is your income. Here are some things to keep in mind when reporting your income on your New Jersey bankruptcy means test document:
- You must report their income even if your spouse is not filing with you. The means test considers the entire household's income, not just the individual filing. There are some exceptions, especially if you are legally separated from your spouse but still living in the same residence.
- Your household income is compared to the mean monthly income of households in New Jersey. This determines your eligibility for bankruptcy and what repayment plan you may be considering.
- Some forms of income, namely any Social Security or other retirement income, do not count as income on your means test. Ensure you understand what you do not have to disclose to have the best chance of approval.
- If you have an unstable or variable monthly income, the average of your past six months is used. To find this, you would add each month of income for the past six months together and divide the sum by 6. The number you end up with is what you would report as your average monthly income.
Chapter 13 Bankruptcy Means Test and Debt Limits
To be able to file for Chapter 13 bankruptcy, there are a few income limits an individual has to meet. First, the individual has to have less than $465,275 of unsecured debt. This is a part of the Chapter 13 debt limit. Unsecured debt is not backed by an asset that can be collateralized. This means that if you could not repay your unsecured debt, there wouldn’t be anything the creditor could repossess to recoup the lost payments. Unsecured debt includes credit card debt, medical bills, utility bills, and more.
Next, an individual cannot have over $2,750,000 in secured debt. Secured debt is debt that is backed by collateral. This can include home mortgages, car loans, and other loans where something can be repossessed to recoup the nonpayment cost.
Other Requirements
Debt limits are not the only requirements for filing for Chapter 13 bankruptcy. There are other requirements, such as:
- Only an individual can apply for Chapter 7 & 13 bankruptcy. Businesses are not eligible for these.
- The individual cannot have had a bankruptcy case dismissed within the previous 180 days. There are exceptions if emergencies or an error caused the dismissal. The court decides on those cases individually.
- The individual cannot have completed a Chapter 13 bankruptcy within the past two years (four years if it was a Chapter 7 bankruptcy). If you went through the bankruptcy process successfully and had some of your debts discharged within this timeframe, you are not eligible and will have to wait for the time to pass.
- The individual has taken the required credit counseling courses. When filing for Chapter 7 or 13 bankruptcy, you must complete two credit education courses with a court-approved debt counselor. Failing to do so would prevent you from eligibility.
- The individual must have filed all tax returns for the previous four years.
- For Chapter 13 bankruptcy, you have enough disposable income to repay the bankruptcy trustee monthly, who will then distribute the payment amongst the various creditors and other fees. If you lack disposable income, the court may decline your case and recommend Chapter 7 bankruptcy.
If you meet these requirements, the court may approve your case. That said, you may consider the pros and cons as well. For example, your credit score and report may be negatively affected.
Bankruptcy Means Test Specific to New Jersey
The means test itself does not change from state to state. However, the test compares your average monthly income to the state’s household average monthly income. Because of this, where you live will change the average income your income will be compared to.
For example, the means test income levels would not differ between Newark and Jersey City, but that income limit may vary between New Jersey and California.
Timeframe of Filing Another Bankruptcy
If you filed for bankruptcy in the past and are looking to file again, be sure that the appropriate amount of time has passed. Before you file another chapter of bankruptcy, you may have to wait a few years. Check out the timeframe below:
Chapter Filed Earlier, Chapter to be Filed, Time Restriction
- Chapter 13, Chapter 13, 2 years between filing
- Chapter 7, Chapter 13, 4 years between filing
- Chapter 13, Chapter 7, 6 years between filing
- Chapter 7, Chapter 7, 8 years between filing
Options If You Fail the Bankruptcy Means Test in New Jersey
If you fail the means test for bankruptcy, you are not eligible for that type. With Chapter 13, failing the means test means you do not have enough disposable income to pay at the end of each month to the bankruptcy trustee. Because of this, the court cannot grant you a Chapter 13 bankruptcy, which may require sizable monthly payments.
Chapter 7 bankruptcy may be an option, depending on your income. Chapter 7 is the cheapest and fastest option, with attorney fees ranging from $1,000-$2,500, and it takes 3-4 months. It is a liquidation bankruptcy, so it will try to liquidate your high-valued assets, such as your house and car, before wiping away the debt. However, the assets may be protected depending on equity, current car loans, and state exemptions. It will be on your report for ten years. You do have to qualify for Chapter 7, which is based on household gross income before taxes. It gives full legal protection.
If you fail the means test for Chapter 7 bankruptcy, you have made too much compared to the requirements. To pass a Chapter 7 means test, your income has to be below the median income for the household in that state, so it may be challenging to qualify. Regardless of why you failed the means test, you have other options.
Debt Settlement:
Debt settlement works in a variety of ways. Either you or a company negotiates with your creditors on your behalf until they agree to a lower debt balance that you can then pay off, leaving a portion of your debt forgiven. An example of this may be the following: Say you owe $30,000 in debt. You may approach your creditor and negotiate the amount down to $15,000. Often, especially if you are working with a debt settlement company, you will have created an account that holds a sum of money you are willing to pay immediately. If the creditors agree, you will have $15,000 of forgiven debt once the remaining sum is paid off.
Cons of Debt Settlement
This option has some potential negatives, namely that you tend to have to miss a few payments for your creditors to be willing to negotiate. Not only does this put you at risk of being sued by the creditor, but it also impacts your credit score for up to seven years.
Additionally, there is no legal protection, so if a creditor does not agree to a negotiated payment plan, they may sue you. If a creditor sues you, that may go on your credit report.
There are also potential taxes on the forgiven debt. Whatever debt was forgiven in the settlement may be taxable, and you have to report the canceled debt on your tax return for the year it was canceled. Generally, you may have to report any taxable amount of canceled debt as income. The creditor may send you a 1099-C form you would have to fill out.
Debt Management:
You could also consider a debt management program. Debt management programs are also known as credit counseling. When working with a debt management company, you must report your entire financial situation to the entity. They will then devise a plan that helps you get out of debt as efficiently as possible. They can also help negotiate lower interest rates on any loans or other debt lines you may already have. This can take anywhere from 36-60 months.
The pro is that it may allow you to pay into the principal rather than the increasing interest. So, if you have credit cards with high interest rates and want a less aggressive option, this may be something to look into.
The downside to this option is that you still have to pay off everything you owe so it may be a more expensive. The good news is that it won’t hurt your credit as much as some of the other options may. However, the accounts included in the program will close, which may take a small hit on your credit.
Conclusion
Overall, the means test is just a way to see what forms of debt relief you may qualify for. Using the bankruptcy means test calculator in New Jersey can help you better understand your financial situation and whether or not bankruptcy is right for you. If you have any questions or want to talk more in-depth, reach to an attorney in your area to set up a free consultation.
