Posts tagged "Means Test"

Business Debt Exception To Means Test

When the Bankruptcy Code was amended, one of the purposes was to make it more difficult for high income earners to eliminate their debt in a Chapter 7 bankruptcy. As a result, sections were added to the Bankruptcy Code which essentially  add some limitations on expenses if you make more than the average family your size in your state. However, the "means test" as it is called, only applies if the debts are "primarily" consumer debts. If your business related debts, such as debts from personal guarantees for a failed business, constitute more than 50% of your debt, the means test does not apply. This generally makes it easier to fit into a Chapter 7 bankruptcy. New Jersey courts may interpret whether a debt is a consumer or business debt differently from other states, so it is best to consult an experienced bankruptcy attorney to make this determination

Qualifying Military Service and Bankruptcy Means Test

As a general rule, individuals filing a bankruptcy in New Jersey, Pennsylvania and other states must complete and file a "Statement of Your Current Monthly Income," referred to as the means test. Under this test, if you make more than the average family your size in your state, then limits may be imposed on your expenses which could result in you having to pay some or all of your debt back in a Chapter 13. The income limits in Pennsylvania are lower than in New Jersey. However, if you are in the military you may be exempt from this requirement.

Chapter 7 Bankruptcy Eligibility as Determined by the Means Test

The bankruptcy means test is a significant factor in determining who can file for debt forgiveness through Chapter 7 bankruptcy. See  http://www.csmonitor.com/Business/Saving-Money/2016/0718/Why-the-bankruptcy-means-test-matters. It takes into account your income, expenses and family size as well as the state you live in to determine whether you can eliminate the debt or whether you have enough disposable income to repay some or all of your debts. Regarding the relevance of the state you live in, as an example, a family of four residing in Northeast Philadelphia Pennsylvania will need to have less income than a family of four residing in Pennsauken New Jersey because the statewide income is less in Pennsylvania then in New Jersey.

Qualifying Military Service and Bankruptcy Means Test

As a general rule, individuals filing a bankruptcy in New Jersey, Pennsylvania and other states must complete and file a "Statement of Your Current Monthly Income," referred to as the means test. Under this test, if you make more than the average family your size in your state, then limits may be imposed on your expenses which could result in you having to pay some or all of your debt back in a Chapter 13. The income limits in Pennsylvania are lower than in New Jersey. However, if you are in the military you may be exempt from this requirement.

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