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What Do the Means Test Results Mean for Your Bankruptcy Filing?

If you are one of the numerous New Jersey residents who is struggling financially, you have probably been doing some research on debt relief options. That search has led you here. While bankruptcy may not have been your first choice, it may be your best option.

Before you start a bankruptcy filing, you have to figure out for which type of bankruptcy protection you qualify. The means test is typically used for this purpose.

Means test basics

To take the means test, you need to know your income level and the median income level of the state. This test is going to compare the two numbers. If your number is lower than the state number, you pass. If your number is higher, Chapter 7 bankruptcy may be out of reach.

If you fail the basic means test, you can examine your situation in further detail in order to determine if you might qualify for a Chapter 7 bankruptcy filing after all. By looking at your monthly expenses, you can figure out your disposable income. This is the amount of money you have left after paying qualify expenses, such as:

  • Housing costs
  • Transportation expenses
  • Food expenses
  • Clothing costs

In other words, how much money do you have after paying to meet your basic needs? If your disposable income is enough to pay your creditors, a Chapter 13 bankruptcy filing may be in your future as opposed to a Chapter 7.

A lot of New Jersey residents qualify for Chapter 7

Thanks to the state's high median income level, more New Jersey residents may qualify for Chapter 7 bankruptcy protection than you would think. If you happen to have some level of disposable income, you may be able to file Chapter 7 bankruptcy anyway and you may achieve approval. If the court finds your disposable income is too high, your filing can be converted to a Chapter 13. Legal counsel can help you determine which type of bankruptcy is best for your situation.

The protections and relief offered in an approved bankruptcy filing can help you move forward in your life with less financial stress. There are benefits to both Chapter 7 and Chapter 13 filings. Once you figure out for which type you qualify and which type will offer you the most benefits, you can begin the bankruptcy process in order to seek immediate relief.


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    David Alan Ast
    Firm Partner David Alan Ast has more than 25 years of experience helping people throughout northern New Jersey get a fresh start and move forward with their financial lives. He is committed to protecting the rights of his clients seeking debt relief.
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    Robert L. Schmidt
    Firm Partner Robert L. Schmidt earned his Bachelor of Arts in Business Administration and Finance from Stockton State College in 1990. Three years later, he earned his Master’s degree from Rutgers University School of Business in Camden with a major in finance. Robert then acquired his J.D. from James E. Beasley School of Law at Temple University in 1997.

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