The means test: What to expect and why it matters

It’s not easy to make the choice to file for bankruptcy. If you are considering this step, you are probably in a precarious financial situation, unsure of how you can pay your debts and ever get ahead. Thankfully, bankruptcy can offer you a way out and allow you to pursue a better and stronger financial future.

There is a lot more involved with filing for bankruptcy than just submitting the paperwork. Not everyone who wants to file is eligible, and there are different types of bankruptcy available to consumers. One of the first steps you will have to take is to complete the means test, the results of which will make it clear which is the best way forward. It may help you learn more about what to expect from this test.

What does the means test actually test? 

The means test is simply a way to determine if a person actually qualifies for bankruptcy. The questions and information required by this test are meant to give an accurate picture of a person’s income, debts, assets and liabilities. The results of it may determine which chapter of bankruptcy you qualify for or whether you can file at all. The first part of the test looks at all sources of your income, including:

  • Gross income from a small business
  • Amount of your paycheck, including bonuses and commissions
  • Child support or spousal support you may receive
  • Income from any rental property you own
  • Retirement income and the amount of your pension
  • Workers’ compensation
  • Unemployment payments

The test will require that you disclose any source of income you may have. This will impact whether it’s possible to repay debts according to an organized bankruptcy plan. If your income is over a certain amount, the means test will have to deduct all of your expenses. If you fail the means test, it may be possible to explain your special circumstances. If your reasons are valid, you may still be able to proceed with a bankruptcy filing

Making the right choice 

Before you proceed or make any important decisions that can affect your financial future, you may want to start by seeking an evaluation of your case with an experienced Tennessee bankruptcy attorney. He or she can explain the options available to you, what you can expect from the means test, and how you can pursue financial security through either Chapter 7 or Chapter 13.

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