Facing financial hardship in New Jersey might have you considering bankruptcy, but how do you know if you qualify based on your income? As of now, a single earner's median income to file for bankruptcy stands at $66,284.
This blog post will guide you through the specifics of the means test and the income limits that determine your eligibility for different types of bankruptcies in New Jersey. Keep reading to understand this crucial step towards regaining your financial freedom.
Understanding the Bankruptcy Means Test and Income Limit in New Jersey
To qualify for Chapter 7 bankruptcy in New Jersey, individuals must pass the bankruptcy means test, which compares their income to the median family income in the state. This test determines eligibility based on income and expenses, and those who do not meet the criteria may consider filing under Chapter 13 instead.
Median income levels by state
Income levels vary widely from state to state, which directly affects bankruptcy filings. In New Jersey, the median income for a single earner is $66,284 annually. This number goes up as the household size increases; for example, a two-person family has a higher median at $81,054.
These figures are crucial in determining who qualifies for Chapter 7 bankruptcy since they set the benchmark for the means test.
Household incomes in relation to state medians play a key role under bankruptcy laws in New Jersey. If your average income over six months falls below these medians—$83,898 for three people or even $122,540 for four—you may pass part one of the means test without further scrutiny.
Passing this threshold is an early step towards filing Chapter 7 and getting closer to debt relief without having to dissect your monthly expenses just yet. Now let's move on to understanding eligibility criteria specifically tailored around Chapter 7 bankruptcy.
Eligibility for Chapter 7 bankruptcy
To qualify for Chapter 7 bankruptcy in New Jersey, debtors must ensure their current monthly income falls below the state's median income level. For a single individual, the monthly income limit is $5,705.33 and for a two-person household, it is $6,854.08.
Additionally, eligibility also depends on whether the debtor has enough disposable income to make repayments to unsecured creditors as determined by the means test.
The means test evaluates average incomes over six months; therefore, individuals or families seeking Chapter 7 bankruptcy must show that their average income during this period does not exceed New Jersey's median income levels based on household size - which are $83,898, $99,056, $122,540, and $155510 respectively.
Qualifying through the means test
After understanding the eligibility for Chapter 7 bankruptcy, qualifying through the means test is crucial. The means test looks at whether your monthly disposable income is below a certain threshold in order to determine if you are eligible for Chapter 7 bankruptcy.
It considers your average income over the past six months and compares it to New Jersey's median income levels based on household size, ensuring that only those truly unable to repay their debts can benefit from filing for bankruptcy.
The means test also takes into account various factors such as living expenses and debt payments, allowing individuals or families who are struggling financially to seek relief through Chapter 7 bankruptcy.
Conclusion
Determining the income limit for bankruptcy in New Jersey is crucial for those considering Chapter 7 eligibility. The means test assesses household income to establish qualification.
Understanding these limits and how they apply is essential when filing for bankruptcy. Seeking legal advice can help navigate this process effectively, especially regarding median income levels and exemptions in New Jersey.
