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What does the means test mean for my bankruptcy filing?

On Behalf of | Aug 8, 2017 | Chapter 7

If you are struggling with overwhelming debt and feel like you are at the end of your rope, you may be aware of the benefits of bankruptcy and aware of how it could help you escape your current hopeless situation. However, outside of knowing the very basics about how this process works, you may be unsure as to which chapter of consumer bankruptcy is best for you or how to take the first steps.

Upon making the decision to file for bankruptcy, one of the first steps you will take is to complete the means test. This determines if you are eligible, and if you are, it identifies your eligibility for either Chapter 7 or Chapter 13 bankruptcy.

What does the means test do?

The means test is essentially the process of laying out your financial situation on paper. This proves that you are in a state of financial duress and that you do not have the means to keep up with your expenses. Some of the expenses and factors you will document through the means test include the following:

  • Your income
  • Monthly expenses, such as utilities, car payments and more
  • Liabilities
  • Real estate that you own
  • Essentials, such as food and clothing
  • Rent or mortgage payments
  • Tax information
  • Child support income or payments
  • Pensions and retirement accounts
  • Anything else that affects your financial status

This process weighs your income, your liabilities and other factors into a determination of whether you can move forward with the bankruptcy process. In some cases, a small dollar amount can make the difference between an applicant being eligible or not. For this reason, you may find it beneficial to seek guidance when walking through this very important part of the bankruptcy process.

The results of your test

The results of the means test will determine the next step for you. After the calculation is complete, you will be eligible for Chapter 7 bankruptcy if the results show that you do not have enough income to cover your expenses. If the test indicates that you have some left over at the end of each month, you will likely be eligible for Chapter 13 bankruptcy.

Essentially, an applicant with an income of more than the median income amount in Tennessee may not be eligible for Chapter 7 unless very special circumstances are present. You would benefit from knowing more about both Chapter 7 and Chapter 13 bankruptcy so that you can prepare yourself for what lies ahead, regardless of the results of the means test.


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