The “Means Test” or “Current Monthly Income Test” compares the debtors’ household’s income, for the six months prior to the bankruptcy filing, to the median median income of New Jersey residents of the same size household, to determine disposable income.
Believe it or not, the U.S. Department of Justice’s records reflect that the median income of New Jersey residents is higher than any other state in the country. I believe that the large median income is mainly due to the high income earning individuals residing in North Jersey, that work in Manhattan.
What does this “mean” to New Jersey bankruptcy debtors? One criteria for a chapter 7 bankruptcy filing is that the debtor’s household’s income is less than the average income of the same size household in New Jersey. Since New Jersey’s average state income is high, it is easier to meet this criteria. A New Jersey resident earning the same income as a Pennsylvania resident, may meet New Jersey’s criteria, with the PA. resident failing the PA. criteria, based on the different state’s median income statistics.
This also benefits New Jersey chapter 13 debtors, whose monthly trustee payments are based, in part, on the debtors’ household’s disposable income, which is calculated based on the state’s average income and expenses.
Robert Manchel, a bankruptcy lawyer in NJ, can be reached at (866) 503-5655, to answer your questions and discuss your bankruptcy protection options.