This article is for informational purposes only and does not constitute legal advice. If you need legal guidance specific to your situation, or information on the New York bankruptcy means test, consider consulting with a qualified bankruptcy attorney.
New York’s relentless financial demands can overwhelm even the most resilient residents. From Manhattan’s astronomical rent prices averaging over $5,000 per month to the daily expenses that add up faster than subway delays, New Yorkers deal with financial pressures that would crush residents of most other states.
Whether you’re dealing with co-op maintenance fees that rival mortgage payments, healthcare costs that drain savings accounts, or the simple reality that a $150,000 household income barely covers basic living expenses in many NYC neighborhoods, the Empire State’s financial landscape is unforgiving.
Rent in NYC is 38.5% higher than in Los Angeles. Add in student loans, credit card debt from surviving between paychecks, and the crushing weight of trying to maintain New York’s expected lifestyle, and financial distress becomes an unfortunate reality for many residents, no matter how hard they work.
When debt collectors start calling and monthly minimums exceed your take-home pay, Chapter 7 bankruptcy might be the lifeline you need. But first, you’ll need to navigate New York’s bankruptcy means test requirements to determine if this powerful debt relief option is available to you. If it is, is it truly the best option for you?
The New York bankruptcy means test is the federal government’s way of determining who truly needs bankruptcy protection versus who should be paying back their debts. According to the United States Trustee Program, this standardized financial assessment evaluates your income against established benchmarks to determine Chapter 7 eligibility.
How does the means test work in practice?
Part 1: Income Comparison – Your household’s average monthly income gets measured against New York’s median income levels for your household size. Fall below the median? You’re automatically qualified and only need to complete Form 122A-1.
Part 2: Expense Analysis – Exceed the median income? Don’t panic yet. You can still qualify by proving that allowable expenses leave you with minimal disposable income after paying necessary bills. This requires completing Form 122A-2.
The calculation uses your average monthly income from the six full months before filing. If you’re filing in September 2025, you’d include income from March through August 2025—no cherry-picking your lowest-earning months.
The following income thresholds apply to bankruptcy cases filed after April 1, 2025, and will remain effective until it’s updated around November 2025. Figures are updated every six months based on U.S. Census Bureau data:
| Household Size | Annual Income Limit |
| 1 person | $68,795 |
| 2 people | $89,052 |
| 3 people | $108,589 |
| 4 people | $134,443 |
For households larger than four people, add $11,100 for each additional family member.
Important Note for NYC Residents: These income limits apply statewide, but remember that $131,781 for a family of four probably goes much further in Buffalo or Albany than it does in Manhattan or Brooklyn. The New York bankruptcy means test doesn’t adjust for dramatic regional cost differences.
The New York bankruptcy means test includes “any amount paid by any entity other than the debtor, regularly for household expenses.” This comprehensive definition covers:
Certain income types are excluded from means test calculations:
Household size significantly impacts your means test calculation. Your household typically includes:
NYC-Specific Considerations: Multi-generational living arrangements are common in New York due to housing costs. Adult children living at home, elderly parents you support, or other family members you help financially may affect your household size calculation, depending on how the bankruptcy court interprets your specific situation.
Earning above New York’s median income doesn’t automatically disqualify you from Chapter 7 bankruptcy—which is fortunate, considering how expensive it is to live here. The second phase of the means test allows you to subtract allowable monthly expenses from your current monthly income.
This calculation determines your “disposable income”—money theoretically available for debt repayment after covering necessary expenses. If your disposable income falls below specific thresholds, you can still qualify for Chapter 7 bankruptcy.
Actual Expense Deductions (based on your real costs):
Standardized Expense Allowances (based on national and regional standards):
The IRS sets these standardized allowances, which vary based on household size and geographic location. New York typically receives higher allowances than most states, reflecting the higher cost of living.
Our calculator mirrors the official bankruptcy forms used by courts and trustees. It will help you estimate:
Completing Chapter 7 bankruptcy provides debt relief to a reasonable degree, but understanding the process helps you make informed decisions.
Once your Chapter 7 petition is filed, an “automatic stay” immediately stops most collection activities, including:
Most Chapter 7 cases are complete within 4-6 months. It usually ends in a discharge that permanently eliminates qualifying debts. However, not all debts can be discharged, including recent taxes, student loans (in most cases), child support, and recent luxury purchases.
New Yorkers get to choose between state exemptions and federal exemptions to protect certain assets. Generally speaking (i.e. considering both state and national exemptions), this is a non-exhaustive list of exempt and non-exempt assets:
Exempt Assets (typically protected):
Non-Exempt Assets (may be liquidated):
Chapter 7 bankruptcy remains on your credit report for 10 years—that’s a full decade of possibly explaining to landlords, lenders, and sometimes employers why you filed. It is illegal for employers to discriminate against you solely because of a bankruptcy filing. However, some prospective employers may consider bankruptcy when making hiring decisions, especially for financial positions. For further reading, visit here.
That explains why many who have successfully filed describe their experience as bittersweet: immediate debt relief? Absolutely. But the long-term credit impact is real and lasting.
While some people begin rebuilding credit within 1-2 years, the bankruptcy notation follows you through major life events—buying a home or even financing a car purchase. The immediate relief from overwhelming debt often outweighs the temporary credit impact, but “temporary” in bankruptcy terms means years, not months.
Failing the means test doesn’t eliminate your options for financial relief. Several alternatives may provide the debt relief you need.
Chapter 13 bankruptcy, the “wage earner’s plan,” allows you to reorganize debts into a manageable 3-5 year repayment plan. Benefits include:
Debt settlement cuts straight to the point: negotiate your balances down to what you can actually afford to pay. Rather than liquidating assets or enduring a decade-long credit report scar, you work with professionals who speak creditors’ language and understand what they’ll realistically accept.
Here’s what legitimate debt settlement delivers:
The key is finding a company that’s been doing this successfully for years—one with A+ BBB ratings, industry certifications (BSI), and membership in professional associations (AADR). Look for firms that can show you real settlement letters from actual cases, not just marketing promises. The best companies are licensed in multiple states and staff counselors who understand that New York debt problems require New York-level solutions.
CuraDebt has all of the above. See our settlement letters — conclusive proof that we know precisely what to do, no matter your situation.
Credit counseling agencies offer debt management plans that focus on reducing interest rates rather than principal balances. These programs:
However, debt management plans have significant limitations that make them unsuitable for many people facing serious financial hardship. You’re still required to pay back 100% of your original debt principal, which means if you owe $50,000, you’ll still pay the full $50,000 even with lower interest rates. Additionally, these programs often require you to close all credit accounts, leaving you without any financial safety net during the lengthy repayment period.
Determining whether Chapter 7 bankruptcy is right for your situation requires careful analysis of your complete financial picture. The means test provides the starting point, but other factors matter:
While bankruptcy can provide powerful debt relief, it’s not the only solution. Debt settlement may offer similar relief with potentially less impact on your credit and financial future, particularly if you have significant unsecured debt but income that exceeds bankruptcy thresholds.
Financial distress requires informed decision-making with potentially life-changing consequences. Whether you’re considering Chapter 7 bankruptcy, exploring debt settlement options, or evaluating other alternatives, professional guidance can help you understand your options and choose the path that best serves your long-term financial health.
No need to jump through hoops to consult with an expert. Simply give us a call through and we’ll have the best person on the job breaking your options down, pronto.
For debt settlement specifically, look for companies with extensive experience. CuraDebt has been helping clients for over two decades and maintains specialized teams with deep expertise in areas like tax resolution.
Our counselors come from diverse professional backgrounds and are able to better address the varied financial challenges New Yorkers face, from Wall Street professionals dealing with bonus-related tax issues to small business owners navigating complex debt situations.
Remember: This guide provides general information about New York bankruptcy means testing. Individual circumstances vary significantly, and professional consultation is recommended before making any major financial decisions.
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