Tennessee Lawyer Advises on the Bankruptcy Means Test

Attorney helps clients understand if they qualify for Chapter 7 protection

Even people who have serious debt problems might not be eligible for Chapter 7 bankruptcy relief. Before a filing can go forward, a petitioner must show that their financial situation is serious enough to qualify under the “means test.” This test is a standard that assesses a debtor’s income and assets versus statewide averages. If you’re counting on having your debts eliminated and then are rejected due to the means test, it can delay your ability to regain financial freedom. At William E. Maddox, Jr. LLC, Attorney at Law in Knoxville, I am an East Tennessee bankruptcy attorney with more than 25 years of experience. After carefully evaluating your situation, I will advise you on whether you should file for Chapter 7 protection or if the means test will prevent you from doing so.

Information that is reviewed as part of the means test

For people struggling financially, filing for bankruptcy under Chapter 7 is a powerful way to clear away old debts and make a new financial start. Given the significant effect this type of bankruptcy has on both debtors and creditors, it is reserved for those who truly need it. My firm counsels East Tennessee clients on various aspects of the means test, such as:

• Income — When you file, you must submit a form detailing your income over the previous six months. If it is under the state median for a household your size, then you can bypass the other elements of the means test and commence the debt discharge process. For cases filed after May 1, 2021, the median monthly income for a single-person household is $4,233.42.
• Expenses — Should your income exceed the median, you might still satisfy the means test if you have no disposable income to pay unsecured debts once certain expenses are deducted. These can include payments for food, housing and health care. If you are in this situation, I can examine your expenses and advise whether you can expect to qualify for Chapter 7 relief.
• Exemptions — Military reservists called up to active duty, disabled veterans and certain other individuals are able to receive Chapter 7 bankruptcy protection without going through the means test.

Starting the bankruptcy process and submitting your financial information for a means test review might seem difficult, but I will guide you through each step and press for a favorable resolution that relieves your debt burden.

Chapter 13 repayment plans are available for those who fail the means test

Many benefits of bankruptcy are still available even if the means test prevents you from filing for Chapter 7 debt discharge. In Chapter 13 bankruptcy, you do not have to qualify under the means test, but the automatic stay will still be granted as you develop a repayment plan for your debts. This can be a useful alternative for people who have fallen behind on their bills but are earning a steady income. In addition to those whose assets exceed the means test amount, homeowners might choose Chapter 13 to give them a better chance of keeping their residence.

Contact an effective Tennessee attorney to schedule a free consultation

William E. Maddox, Jr. LLC, Attorney at Law in Knoxville represents Tennessee residents in bankruptcy proceedings and other debt relief matters. I also advise clients on business transactions and estate planning. To schedule a free initial consultation, please call 865-293-4953 or contact me online.