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What Is the Bankruptcy Means Test in NYC?

Understanding New York’s Chapter 7 Bankruptcy Means Test

Passing the Chapter 7 means test is a gateway for getting rid of your unsecured debt and achieving financial freedom. Chapter 7 bankruptcy allows for the liquidation of your assets to repay creditors what you owe them and discharges most, if not all, of your debt, typically excluding child support, alimony and recent tax debts.

Chapter 7 Eligibility in NY

To qualify for this chapter, you must pass the means test which was implemented in 2005 to prevent people who can afford to repay at least some of their debts from getting Chapter 7 relief. To prepare for the means test, gather your income statements and paychecks as well as your monthly expenses.

The Chapter 7 bankruptcy means test allows people who make below the median household income limit to file for Chapter 7 relief. If your income is above New York’s median income level, the second element of the means test examines your income and expenses to calculate your disposable income. If it’s determined that you won’t have enough disposable income remaining after paying pre-determined monthly expenses, then you may continue filing for Chapter 7 bankruptcy.

NY Median Income

In order to be eligible for Chapter 7 relief, you must file a form in which you calculate your current monthly income by averaging your total gross income over the past six months. This includes all income sources: Employment, business, property, personal, etc. but not any income from Social Security benefits.

New York’s median income standards for cases filed on or after May 1, 2020 include the following:

One-Person Household

  • Monthly income: $4,761.42
  • Annual income: $57,137.00

Two-Person Household

  • Monthly income: $6,053.50
  • Annual income: $72,642.00

Three-Person Household

  • Monthly income: $7,353.33
  • Annual income: $88,240.00

Four-Person Household

  • Monthly income: $8,962.50
  • Annual income: $107,550.00

Five-Person Household

  • Monthly income: $9,712.50
  • Annual income: $116,550.00

File for Chapter 7 Bankruptcy with the Help of Our Lawyer

Several factors may interfere with successfully completing the means test. You may have made errors when gathering the appropriate documents and statements needed to accurately calculate your income.

Further, since this is likely your first time filing for Chapter 7 bankruptcy relief, you need qualified legal counsel from the Law Office of Simon Goldenberg, PLLC to walk you through every stage of the process and protect your rights. The Chapter 7 bankruptcy process can be tricky and misleading, so you must rely on a bankruptcy lawyer who is equipped to handle your Chapter 7 relief matters with the utmost focus and diligence.

Don’t attempt to pass the means test without consulting our Chapter 7 bankruptcy lawyers first. One minor slipup could cost you a debt-free future. Avoid unnecessary risks by contacting us at (888) 301-0584 to get started on your case!