Not everyone who wants to file for personal bankruptcy is eligible to do so. In fact, one of the most common forms of consumer bankruptcy available to Tennessee residents involves an objective evaluation of the individual filers’ financial statuses prior to allowing claims to move forward. That evaluation is referred to as the means test, and it is required of people who want to pursue Chapter 7 bankruptcy protections.
The means test under Chapter 7 has several parts. The first part of the evaluation involves a review of the filer’s income. The evaluation will look at around six months’ worth of financial information on the individual. Income for the purposes of the means test can include — but is not limited to — wages from employment, tips, interest gained from financial accounts, money received for child support or spousal support and disability insurance payments.
If after the above-discussed evaluation the individual’s income is below an established threshold then the person can likely file for Chapter 7 bankruptcy. Individuals who cannot file for Chapter 7 bankruptcy may be eligible to file for the other popular form of consumer bankruptcy, Chapter 13 bankruptcy. However, individuals who want to file for Chapter 7 and whose incomes are above the threshold have a second step of the means test to use to see if they can still qualify.
The second step of the means test involves deducting certain expenses from a person’s income total. The deduction of such expenses may bring the person’s income under the threshold; if it does then the individual can file for Chapter 7. Even if a person is above the threshold the person may qualify for Chapter 7 bankruptcy under an exception such as recent unemployment.
There are many procedural steps to preparing a bankruptcy claim. In Chapter 7 bankruptcy, satisfying the means test is just one. To learn more about the process of preparing for a personal bankruptcy claim, readers may work with bankruptcy attorneys who practice in their areas.