What is the means test?
The means test compares the household income and expenses of people filing for bankruptcy to average households in the same state. It has two parts.
The first part compares gross household income over the 6 months before filing bankruptcy to the median income for a household of the same size. If household income falls below the median, the means test ends there.
If household means test income exceeds the median income, then the means test measures disposable monthly income. This calculation subtracts certain allowable expenses from gross household income. Importantly, most expenses used in the means test are not based on the household’s actual “real world” expenses, but on fixed averages for households of the same size in the same state. Some actual expenses are allowed – such as payments on taxes, auto loans, mortgages, or domestic support obligations. The result shows how much income the household should have leftover any given month if it only paid the average allowable expenses for a household of the same size. Notably, the means test disregards expenses in non-allowed categories (such as tobacco) or most above-average expenses.
How does the means test impact eligibility for Chapter 7 bankruptcy?
Households with income above the median and with significant disposable monthly income on their means test generally cannot file Chapter 7 bankruptcy. Below-median households or households above median but with no disposable income are presumptively allowed to file Chapter 7.
Congress introduced the means test in 2005 to address the perception that people with higher incomes who could afford to pay their debts were abusing the Chapter 7 process, which discharges debts without payment. Only in the rarest cases can that presumption be rebutted.
How does the means test impact Chapter 13 bankruptcy?
In Chapter 13, the two parts of the means test have different impacts. Households with income above the median on the first part of the means test must commit to paying all disposable income to creditors for 5 years before receiving a discharge. Under-median households can receive a discharge after only 3 years of payments.
For people from above-median income, any disposable income on the second part of the means test must be committed to pay unsecured creditors, setting a minimum payment that must be made through the payment plan.
Must everyone who files bankruptcy complete the Means Test?
The means test only applies to people filing bankruptcy when most of the debt is consumer debt. Consumer debt is debt incurred to pay for personal, family, or household expenses. Credit cards, medical bills, auto loans, and personal loans are the most common examples of consumer debt. Some examples of non-consumer debt include student loans, tax debts, or business loans – anything other than debt incurred for personal, family, or household expenses.
If most of your debt is not consumer debt, the means test does not apply.
How do you determine household size? Who is a means test dependent?
Household size includes the person filing bankruptcy, their spouse, and any dependents. In most cases, a means test dependent must be someone who could be claimed as a dependent on IRS tax returns. The means test definition expands beyond the IRS test, however, and can include non-married individuals living as part of a longstanding economic unit. Any income in the household must be included in means test calculations.
To illustrate: A roommate who pays half of the rent but has no other shared finances would not typically be considered a member of the debtor’s household. On the other hand, a live-in fiancée who shares bank accounts and has joint debts with the debtor would likely be considered a member of the household.
What are the median incomes for means test purposes in New Jersey?
As of December 2025, the following are the median incomes by household size In New Jersey:
Household of 1: $7,021.42/month or $84,257/year.
Household of 2: $8,575.25/month or $102,903/year.
Household of 3: $10,931.08/month or $131,173/year.
Household of 4: $13,592.50/month or $163,110/year.
Add ~$11,000/year for each additional household member.
The full table of values can be found at
https://www.justice.gov/ust/eo/bapcpa/20250515/bci_data/median_income_table.htm.
What should I do after reading this post?
The means test is complicated, and the outcome cannot be assumed without a detailed, case-specific analysis. Do not make any assumptions about how the means test might affect you without first consulting an experienced bankruptcy attorney.
We recommend reaching out for a free consultation. Our law firm has decades of experience in Bankruptcy law.
We are best situated to assess your circumstances and give you a roadmap going forward.
Our pricing is transparent, and we offer flexible payment plans.
The sooner you schedule a free consultation; the sooner you’ll know how to get your life back on track.
Call the Law Offices of Lee M. Perlman at 856-751-4224 to request a consultation about how bankruptcy or other debt resolution services might help you.