Means Testing in Chapter 7 or Chapter 13 Bankruptcy

What is Means Testing?

The means test was added to the bankruptcy code in October 2005 to create objective standards for determining which individuals qualify for filing for relief in Chapter 7 vs. Chapter 13 bankruptcy. It applies only to individuals and only those individuals who have primarily consumer debt.

The first step in Chapter 7 bankruptcy means test is simple. It compares your income to the median income in your state for families the same size as yours. If your income is lower than the median the debtor “passes the means test” and most likely will file a Chapter 7 bankruptcy. If the debtor’s income exceeds the median income, a further analysis is performed, looking at the debtor’s calculated ability to fund a Chapter 13 plan. The debtor’s disposable income is calculated by a mix of actual and standardized expenses to the debtor’s previous average income. If it is determined that the debtor can pay $10,950.00 in five years or as little as $182.50 a month to creditors, a presumption arises that a Chapter 7 filing is abusive and may not be appropriate, however, the presumption of abuse may be rebutted by the debtor. Your income, for means testing purposes, is your income for the six months prior to the filing of your bankruptcy. For means test purposes, it doesn’t necessarily matter what your income is now. What matters is your income for the proceeding six months. Income includes income from all sources with the exception of Social Security related programs. For example, income includes unemployment and employment income as well as pensions and passive income.

There are many unanswered questions about the application of the means test in various family configurations and income scenarios. Only court interpretation of these murky areas of the amendments will begin to map the actual effect of the means test and other aspects of the BACPA Amendments of 2005. And remember, Congress’s goal is to reserve Chapter 7 bankruptcy for those who really do not have the means to pay. However, it is also important to remember that most people who would have qualified for a Chapter 7 bankruptcy prior to the October 2005 Amendment, still do qualify for Chapter 7 bankruptcy relief.

Median Income for Pennsylvania and New Jersey Residents

Family Size PA Median Income NJ Median Income
1 $44,396 $59,812
2 $53,572 $71,744
3 $67,516 $85,764
4 $77,590 $102,894
5 $85,090 $110,394
6 $117,894 $117,894
For each additional dependent + $7,500 + $7,500

These income amounts are accurate as of 12/1/10 and are periodically changed based upon IRS and census data.

Our Results

Our attorneys have successfully helped thousands of satisfied clients across Pennsylvania and New Jersey. To see how our attorneys can help you, click below. See What We Can Do

  • Speak To An Attorney For Free

  • This field is for validation purposes and should be left unchanged.

Awards & Recognitions

Best Pennsylvania Law Firm Near Me
Best New Jersey Law Firm Near Me
Best Philadelphia and Bucks County Lawyers
Pennsylvania and New Jersey Bankruptcy Lawyer
Pennsylvania and New Jersey Criminal Defense Lawyer
Pennsylvania and New Jersey Disability SSDI Lawyer
Bucks County Criminal Defense Attorney
Best Pennsylvania Law Firm Near Me
Pennsylvania and NJ Lawyers Near Me
Pennsylvania and NJ Attorneys Near Me
Pennsylvania and NJ Lawyer Near Me
Pennsylvania and NJ Attorney Near Me

13 Convenient Office Locations

map-pinPennsylvania Offices map-pinNew Jersey Offices


328 W Broad St
Quakertown, PA 18951
Tel: (215) 515-6876
Get Directions

Plymouth Meeting

600 West Germantown Pike #400
Plymouth Meeting, PA 19462
Tel: (215) 515-6876
Get Directions


44 E Court Street #100
Doylestown, PA 18901
Tel: (215) 515-6876
Get Directions


10000 Lincoln Drive E, Suite 201
One Greentree Centre
Marlton, NJ 08053
Tel: (856) 213-2805
Get Directions


7909 Bustleton Ave, First Floor
Philadelphia, PA 19152
Tel: (215) 607-2715
Get Directions


3554 Hulmeville Rd, #102
Bensalem, PA 19020
Tel: (215) 515-6389
Get Directions

Bala Cynwyd

2 Bala Plaza, Suite 300
Bala Cynwyd, PA 19004
Tel: (610) 557-3209
Get Directions


909 Route 130 South, Suite 202
Cinnaminson, NJ 08077
Tel: (609) 796-4344
Get Directions


135 Old York Road
Jenkintown, PA 19046
Tel: (215) 544-3347
Get Directions


137 N 5th St, Suite A
Allentown, PA 18102
Tel: (215) 240-4082
Get Directions


101 Larry Holmes Dr, #212
Easton, PA 18042
Tel: (215) 515-7077
Get Directions

Hamilton Twp.

3525 Quakerbridge Rd, #903
Hamilton Township, NJ 08619
Tel: (609) 236-8649
Get Directions


371 Hoes Lane, Suite 200
Piscataway Township, NJ 08854
Tel: (908) 367-7256
Get Directions