Passing the bankruptcy means test with disposable income

If you’ve been considering filing for Chapter 7 bankruptcy in Tennessee, you’ve probably heard of the bankruptcy means test. The means test is a relatively lengthy form that is used to determine whether your disposable income is low enough to qualify you for Chapter 7 bankruptcy relief.

Median income

The first step to passing the means test is to determine whether your average monthly income from all sources falls below the median income for Tennessee. If you are filing for bankruptcy with your spouse, you will need to count both of your incomes on the form. You will also need to take into account your family size and the number of dependents you have.

If your income falls below the median income for your family size in Tennessee, you automatically pass the means test. If it doesn’t, you’ll have a lot more paperwork ahead of you.

Disposable income

The good news is that you can still qualify for Chapter 7 bankruptcy relief even if your income is higher than the median. You will have to prove that your disposable income does not exceed $7,700 over the next five years. The way that you will do this is by subtracting all of your monthly expenses from your adjusted monthly income and then multiplying that number by 60.

Your qualifying monthly expenses include all of your basic housing costs as well as your costs for transportation, health care, education and childcare. You can also deduct the cost of paying for your family’s food and clothing and any regular religious or charitable contributions you make.

Other requirements

After you have passed the means test, other requirements will have to be met before your debt can be discharged. One of those requirements is to attend a creditor hearing in which you will answer questions about your bankruptcy case under oath. To ensure that your Chapter 7 bankruptcy case goes smoothly, you may want to have assistance from an attorney.

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