Median Income - Affects Bankruptcy Eligibility
Ralph A. Ferro, Jr., Esq. It is important for those looking to file bankruptcy to be knowledgeable of What is Median Income?
Many clients come to me and think they are not qualified to file for bankruptcy because they earn too much money.
Although income is an important factor, it is not the only factor.
Assets, Debts, and Expenses are also determining factors when filing for bankruptcy.
I always meet with potential bankruptcy clients in person for a Free Bankruptcy Consultation.
Many factors are involved in filing for bankruptcy, and I will not rush a recommendation to a client over the phone.
I am a Board-Certified Bankruptcy Lawyer.
I care about my clients’ future successes.
I do a thorough review of their finances to make a recommendation on what type of bankruptcy is best (or if bankruptcy is not right for a client)
I provide a recommendation on which Bankruptcy Chapter is applicable.
I will not file a bankruptcy case unless it is in the best interest of my client.
Please read my clients’ reviews.
Chapter 7 Bankruptcy – where you keep your assets and pay nothing back to creditors *
or
Chapter 13 Bankruptcy – where you keep your assets and pay back something to your creditors.
*Practicing over 30 years in the bankruptcy field of law, I have never lost a filed Chapter 7 case for a client.
What is Median Income?
The income that pertains to you in the means test is evaluated to determine eligibility for filing bankruptcy chapter.
- You can eliminate all of your debts.
- You can pay zero back to your creditors (Chapter 7 Bankruptcy)
or
- A repayment plan applies; and the amount of Plan payments and the length of the Plan is prepared for discussion (Chapter 13 Bankruptcy).
Median Income Test - All States are linked below: (bankruptcy resources)
The Office of the United States Trustee periodically reviews the Medium Income Chart (Means Test Evaluation) and statistical data to determine whether changes are necessary.
When was the median income changed in the past 2 years?
- April 1, 2025
- November 1, 2024
Median Income and Means Test - Top 4 States 2024 - 2025
- NJ is among the Top 4 States for 2 years in a row.
- That should come as no surprise – we are aware that the cost of living in the State of New Jersey is high.
When was the means test introduced?
- 2005 -Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA)
Why Did the Legislation Introduce the Means Test for Median Income?
- To prevent people with higher incomes from abusing bankruptcy.
- Before 2005:
- Under the old rules, if someone was unemployed or had a low income, looking at household monthly income was not required.
- Non-filing family spouse’s income was not included in bankruptcy eligibility.
- Currently:
- Household income is evaluated. Even if the other household member(s) are not filing for bankruptcy, their income must still be disclosed.
You don’t have to take the means test if:
- Your debts are mainly business – related.
- You’re a disabled veteran with debt incurred while on active duty.
- You’re a member of the National Guard or a reservist under specific conditions.
Finding the best and most expert bankruptcy lawyer and the right match for you is essential. I am an expert in bankruptcy law, as I have been Board-Certified in Consumer Bankruptcy Law by the American Board of Certification since 2015 and renewed twice in 2019 and 2024.
- When you call me, you reach me directly.
- There is never a screening process to reach me for bankruptcy services.
- I answer my calls directly.
- You are never passed around or transferred – you reach me directly.
- My bankruptcy Clients are important to me.
- Call me today for a free in-person bankruptcy consultation.
