The filing of a bankruptcy by an individual that has consumer debts must provide income information to their attorney so that a “Means Test” can be conducted. In other words, the court wants to see if the person filing bankruptcy has the means to pay something back to the creditors. To do this, the court compares the debtors income to the average income of a family the same size as the debtor that lives in the same state as the debtor. If the income is higher than the average, there is a presumption that the debtor should file chapter 13 and pay something back to creditors. However, if the person filing has enough reasonable and necessary expenses that they still have no disposable income despite the amount of annual income, they can still file chapter 7. https://www.bravermanlaw.com/bankruptcy-law/the-bankruptcy-means-test/
In New Jersey, the income limit for a family of one has been $77,681.00 but as of April 1, 2023 it goes up to $83,898.00. For a family of two the amount increases from $91,716.00 to $99,056.00. For a family of three, the increase goes from $113,460 to $122,540.00. Finally, in New Jersey for a family of four the limit increases from $143,987.00 to $155,510.00. For each family member above four the limit goes up by $9,900.00.
By comparison, in Pennsylvania, the income limit for a family of one has been $61,530.00 but as of April 1, 2023 it goes up to $66,454.00. For a family of two the amount increases from $74,369.00 to $80,321.00. For a family of three, the increase goes from $93,412.00 to $100,888.00. Finally, in Pennsylvania for a family of four the limit increases from $113,037.00 to $122,083.00. For Pennsylvania, the limit goes up by $9,900.00 for each family member over four.
The higher number makes Chapter 7 more readily available but even if your income exceeds the limit you may still be eligible for a chapter 7.
