What Is the Means Test in Bankruptcy?

In 2005, the United States enacted the Bankruptcy Reform Act. Under the new guidelines, the courts are able to make a determination about whether or not you would be able to afford payments under a reorganization of your debt – in accordance with a Chapter 13 filing.

One of the largest differences between Chapter 7 and Chapter 13 protections is that, with Chapter 7, most of your debts are discharged. Under Chapter 13, you get to live in much the same way you’ve become accustomed – keeping your house and vehicles – and you pay back your debt over a longer period of time.

The Bankruptcy Court uses the Means Test to determine whether or not your income is too high for the Chapter 7 threshold. There are many variables to this calculation.

Essentially, the test determines if your income is higher than the average income for people living in your county. If your income is determined to be too high for Chapter 7, you may have to file for Chapter 13 protection instead – still having to pay down your debts but at a slower rate.

Contact a Cherry Hill Bankruptcy Attorney for a Consultation About Debt Collection Lawsuits in Central & South Jersey

If you are struggling with debt, you may need a fresh start financially. An experienced bankruptcy and debt relief attorney can help you explore your options and determine the best course of action for you, your family, and/or your business. The experienced New Jersey bankruptcy lawyers at The Law Office of Joel R. Spivack understand the nuances of NJ and federal bankruptcy laws, so we can help you protect your interests.

Call 856-488-1200 or fill out our online contact form to schedule a confidential consultation. We have an office conveniently located at 1415 Marlton Pike East, Suite 302 Cherry Hill, NJ 08034.

The articles on this blog are for informative purposes only and are no substitute for legal advice or an attorney-client relationship. If you are seeking legal advice, please contact our law firm directly.

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Attorney Joel R. Spivack is an experienced bankruptcy and residential real estate transactions lawyer in Cherry Hill, New Jersey. Clients come to us for legal services, but what we really provide is peace of mind. For more than 30 years, Attorney Spivack has helped people make wise, informed decisions about bankruptcy filings, debt relief options and residential real estate transactions.
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