What Is the Means Test?

The New Jersey bankruptcy means test is a financial formula used to determine whether you qualify for Chapter 7 bankruptcy. The framework and official forms, including Form 122A, are published by the U.S. Trustee Program. The test compares your household income to New Jersey median income figures and then analyzes allowable expenses under federal guidelines. Its purpose is to assess whether you have sufficient disposable income to repay creditors under Chapter 13 instead of filing Chapter 7.

Step 1:

Compare Your Income to NJ Median Income

Household Size Matters
Median income thresholds vary based on the number of people in your household.

Six-Month Income Snapshot
The means test looks at your average income during the six months prior to filing, not just your current month.

NJ Median Income Figures
The U.S. Trustee Program periodically publishes updated median income data used in Chapter 7 means testing.



If your income falls below the applicable New Jersey median income level for your household size, you may qualify for Chapter 7 without completing the second part of the test.

Step 2:

Calculate Allowable Expenses (Form 122A)

If your income is above the median, the test moves to a more detailed calculation using official Form 122A.

Standardized Expense Categories
Certain expenses are based on IRS standards, not your actual spending.

Secured Debt Payments
Mortgage or car loan payments may be included in the calculation.

Priority Debts
Certain tax obligations and domestic support obligations can affect disposable income analysis.

Disposable Income Result
If the calculation shows minimal disposable income, you may still qualify for Chapter 7.



Understanding how Form 122A works is critical — small miscalculations can change eligibility outcomes.

What Income Counts in the Means Test?

• Wages and salary
  
• Business income (net income for self-employed individuals)
  
• Rental income
  
• Regular contributions from others
  
  

Some income sources may be treated differently under federal law. Reviewing what counts — and what does not — is one of the most common areas of confusion.

What to Gather Before Reviewing Eligibility

To evaluate your Chapter 7 means test position, you will typically need:



• Pay stubs or proof of income for the past six months
  
• Recent tax returns
  
• Documentation of business income if self-employed
  
• Mortgage or vehicle loan statements
  
• A list of recurring monthly expenses
  
  

Preparing accurate documentation helps avoid preventable filing errors.

Do I Qualify for Chapter 7 in NJ?

If you pass the means test, Chapter 7 may allow discharge of qualifying unsecured debts such as credit cards and medical bills. If you do not qualify, Chapter 13 may provide a structured 36–60 month repayment option.



To better understand chapter differences, review Chapter 7 Bankruptcy and Chapter 13 Bankruptcy.

Common Means Test Pitfalls

Using the Wrong Income Period

The six-month lookback period is fixed and may not match your current income.

Misunderstanding Household Size

Household composition affects median income thresholds.

Confusing Gross vs. Net Income

The calculation relies on specific income definitions, not simple take-home pay.

Assuming You Automatically Fail

Being above median income does not automatically disqualify you from Chapter 7.

If You Do Not Qualify for Chapter 7

Failing the means test does not mean bankruptcy is off the table. Chapter 13 may allow you to reorganize debt into a court-approved repayment plan based on your disposable income. For business owners, self-employed individuals, or higher-debt situations, other chapters may also be considered.



The key is matching the chapter to your financial reality.