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The Means Test Analysis is intended to prevent filers with higher incomes from filing a Chapter 7 bankruptcy. It is also used to evaluate the reasonable and necessary expenses of a Chapter 13 filers to determine the amount of disposable income that must be paid to general unsecured creditors.

If your total monthly income over the course of the next 60 months is less than $7,475 then you pass the means test and you may file a Chapter 7 bankruptcy. If it is over $12,475 then you fail the means test and don't have the option of filing Chapter 7.

Illinois law also gives each individual the right to exempt up to $4,000 in equity for any other personal property, including cash or money in the bank. If a husband and wife file jointly for bankruptcy, each spouse is entitled to claim these exemptions as well.

The means test is calculated by comparing the debtor's average income for the past six months (current monthly income), annualized, to the median income for households of the same size in the debtor's state of residence.

For example, typically under Federal exemptions, you can have approximately $20,000.00 cash on hand or in the bank on the day you file bankruptcy. The vast majority of my clients have considerable less than $20,000.00 in the bank the day I file their bankruptcy.

The Chapter 7 Means Test in New Jersey, takes your household income and averages it over the last six months. It then compares your average household income to the median income of a similar-sized household in New Jersey.

If you own your house outright or have substantial equity (more than $15,000 for an individual filer or $30,000 for a married couple), you risk liquidation of your home if you file Chapter 7.