The are several debt relief programs that can help Tennessee residents facing financial crises to alleviate debt and restore financial stability. Every case is unique, just as each type of debt assistance has its own requirements and guidelines. It is possible, for instance, to quality for Chapter 13 bankruptcy but not Chapter 7 or vice versa. The “means test” is a determining factor.
Chapter 7 bankruptcy is a type of debt relief that is available to individuals, as is Chapter 13. They are both income-based programs. A person interested in filing Chapter 7 bankruptcy must first take a means test. If this person’s income is at or below a certain level, a Chapter 7 petition will not be possible. An income above the median level for the state disqualifies a person for the program, but Chapter 13 may still be available.
How does the means test actually work?
To take a means test to determine eligibility for Chapter 7 bankruptcy, a prospective applicant must fill out certain forms, which include information regarding income, alimony, investments, pension benefits and more. Based on the information provided, an annual income figure can be calculated. The amount is then compared to the median income per household in the same state for a similar family size.
What happens if a petition is filled out incorrectly?
It is possible for someone to take a means test, file a Chapter 7 bankruptcy petition in a Tennessee court, then realize that an error was made. If necessary, the court can convert a Chapter 7 filing to a Chapter 13 petition. To avoid such mistakes, however, it is always best to consult with a bankruptcy law attorney to help determine which program best fits one’s debt relief needs and financial goals.