The New Jersey Means Test: Do You Qualify for Chapter 7?
The New Jersey Means Test: Do You Qualify for Chapter 7?
Chapter 7 bankruptcy offers a fresh financial start for individuals burdened by overwhelming debt. However, not everyone qualifies. The New Jersey means test determines whether a filer has enough disposable income to repay creditors. If your income falls below the state median or your expenses outweigh your earnings, you may be eligible for Chapter 7 relief.
What Is the New Jersey Means Test?
The means test assesses income and expenses to determine eligibility for Chapter 7 bankruptcy. It compares your household income to the median income for a similar-sized household in New Jersey. If your income is below the median, you automatically qualify. If it exceeds the median, additional calculations will determine whether you have disposable income to repay debts through a Chapter 13 repayment plan instead.
Income Limits and the Median Threshold
The first step in the means test is reviewing your household income for the past six months. This includes wages, self-employment earnings, rental income, and other sources. The New Jersey median income changes periodically, so checking the most recent figures is essential. If your earnings fall below this amount, you can move forward with a Chapter 7 filing.
Expenses That Impact Means Test Calculations
For those exceeding the median income, necessary expenses play a key role in determining eligibility. Allowable expenses include housing costs, food, medical bills, childcare, and transportation. The test deducts these from your income to calculate disposable income. If little to no disposable income remains, Chapter 7 may still be an option.
What If You Don’t Pass the Means Test?
Failing the means test does not mean bankruptcy is off the table. Chapter 13 bankruptcy provides a structured repayment plan to help manage debt over time. In some cases, adjustments to reported income or expenses may affect eligibility, so reviewing all financial details carefully is important before deciding on the best path forward.
The New Jersey means test determines whether Chapter 7 bankruptcy is the right solution for your financial situation. Income levels, necessary expenses, and financial obligations all impact the results. If you’re considering filing for bankruptcy, reviewing your means test eligibility can be the first step toward financial relief.


