If you are interested in pursuing debt relief through Chapter 7 bankruptcy, you must pass an income bankruptcy “means” test. The means test is to prevent high-income earners from using Chapter 7 to wipe out debt. Although failing the test creates a presumption that a Chapter 7 case is abusive, it does not always disqualify you from filing a Chapter 7 bankruptcy case. You may rebut a presumption of abuse by showing special circumstances. However, Chapter 13 bankruptcy is available whether or not you pass the means test.
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The Means Test
The means test is similar to a monthly budget that examines both your income and expenses to determine if you have the ability to pay some part of your debts. However, it is far from simple and you need a qualified lawyer, like Philip Counce, to know the fine points.
If one’s gross monthly income (based on a six-month average) is equal or less than the medium income level in Tennessee (or your state of residence), you pass the means test without looking at the expense side. Sounds simple enough, except that not all income is required to be included in this calculation. It is also important to consider the timing of a filing to allow you to average the lean months into this calculation.
Nevertheless, you may still pass the means test if your gross monthly income exceeds the medium income because you are allowed to deduct certain statutory allowances and some actual expenses from your income. Many variables come into play with this part of the means test, such as age, mileage of your car, or special expenses for caring for an elderly parent, to name a few.
For more than 30 years, bankruptcy attorney Philip F. Counce has helped thousands of clients in Tennessee and surrounding areas obtain debt relief. He is prepared to review your finances, making sure accurate information is submitted for the bankruptcy means test, and he takes an aggressive approach to claim all expenses and deductions to make Chapter 7 possible.
What If You Don’t Pass The Means Test?
If you do not qualify for Chapter 7 debt relief, we will pursue alternative measures. Chapter 13 bankruptcy is valuable for people with regular income but overwhelmed with extensive debts. It is particularly beneficial for individuals who own a significant amount of assets and property they wish to keep, such as a home or small business.
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Unlike many firms, with us you will always discuss your financial situation with an attorney, not a paralegal or assistant.
We are a Title 11 Debt Relief Agency. We help people file for bankruptcy relief under the Bankruptcy Code. This ad does not create an attorney-client relationship until a written agreement is signed.