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Somerset County, NJ Bankruptcy Lawyers

One of the most important steps in bankruptcy is taking the means test. Like all other aspects of bankruptcy proceedings, it is important for debtors to understand what the means test entails.

Debtors must take the means test when filing for bankruptcy in Somerset County. This test will determine the bankruptcy chapter that best suits your financial situation. There are specific means test forms for both Chapter 7 and Chapter 13 cases. If there is a presumption of abuse based on the amount of money you make compared to your expenses, you can file an additional form explaining your exemptions and your eligibility to file Chapter 7. Means test results are somewhat flexible. That said, the results of your test will likely be best suited to your situation, even if they are not what you anticipated them to be in Somerset County.

Call our Somerset County, NJ bankruptcy lawyers at (609) 755-3115 to set up a confidential and free case review with Young, Marr, Mallis & Associates.

Taking the Means Test for Bankruptcy in Somerset County, NJ

Before you enter bankruptcy in Somerset County, our bankruptcy lawyers will determine which chapter is best for your situation by having you take the means test. After this is complete, you can file your bankruptcy petition.

The means test is not officially taken, so to speak, until you submit your bankruptcy forms to the court in Somerset County. That said, the bankruptcy means test forms you must file should correspond to your bankruptcy chapter, meaning you should determine the results of your means testing before you actually file.

To take this test, you will compare your income over six months to the average state income for households of a similar size to yours. The results will place you into one of two categories: Chapter 7 or Chapter 13. Suppose you are advised to file Chapter 7 based on the results of the test. In that case, that means that your income is below the average income in New Jersey and that you might have to liquidate assets to repay creditors, depending on your secured and unsecured debts. Suppose you are able to file Chapter 13 based on the results of the test. In that case, that means your income is above the average in Somerset County and throughout the state. You will repay creditors by consolidating debt under the same low interest rate and making payments over several years.

Means Test Bankruptcy Forms in Somerset County, NJ

When affirming the results of your means test with the court in Somerset County, you must submit several forms, depending on your bankruptcy chapter.

Chapter 7

If you plan to file Chapter 7 in Somerset County, you must submit Form 122A-1 and 112A-2 to the court. The former is Chapter 7 Statement of Your Current Monthly Income. This form includes information about your case, marital status, and income. Our attorneys can ensure that this form is properly filled out so that you submit accurate information about your financial status to the court. Form 112A-2 is where the actual means test calculations take place. On this form, debtors can include their housing costs, such as mortgage and insurance, as well as transportation and other necessary expenses. By submitting these forms to the court, you can confirm your ability to file Chapter 7 in Somerset County.

Chapter 13

When filing for Chapter 13, debtors must submit Form 122C-1, Chapter 13 Statement of Your Current Monthly Income and Calculation of Commitment Period. Similar to the forms necessary for Chapter 7, Form 122C-1 requires debtors to include information about their marital status and all sources of income. By completing the calculations required on this form, debtors can more easily determine their commitment periods for repayment. The final means test form Chapter 13 filers have to complete is Form 122C-2, Chapter 13 Calculation of Your Disposable Income. This form is dedicated to information about a debtor’s expenses so that the court can determine the amount of disposable income a debtor has to set aside for a repayment plan.

Filing a Statement of Exemption from Presumption of Abuse in Somerset County, NJ

Sometimes, after filing means test forms related to Chapter 7, debtors are flagged as possibly abusing the process because of their income. By filing Form 122A-1Supp, debtors can provide the clarification the court might need.

For many debtors, filing Chapter 7 is preferable to Chapter 13 because debts might be immediately discharged, leaving debtors with no responsibility to repay them. Because of this, Chapter 7 bankruptcies typically finish within several months, as opposed to Chapter 13 bankruptcies, which can take several years to complete.

If there is a presumption of abuse based on a debtor’s income compared to the median income in New Jersey, our attorneys can help debtors complete Form 112A-1Supp. On this form, you can answer questions about the type of debt you have, such as whether or not it is primarily consumer debt and your veteran status. Some exceptions permit debtors to file for Chapter 7, despite having a higher income in Somerset County.

What to Remember About the Means Test in Somerset County, NJ

While means test results will determine the chapter of bankruptcy you can file, that is all this test is able to dictate. It will not affect your bankruptcy proceedings any further.

Means test results decide the path you take in bankruptcy. Contesting the results of your means test is often unnecessary, as the results are based on each debtor’s unique financial situation. Regardless of the results of your test, you will get an automatic stay when you enter into bankruptcy. Our attorneys can address your concerns if you are worried that the results of your means test will be inaccurate or cause you to file for a bankruptcy chapter you would otherwise like to avoid.