What Is the Maximum Income for Filing Chapter 7 in Tennessee?

TRI Writer • February 10, 2022

One of the eligibility requirements to file a Tennessee Chapter 7 bankruptcy is to fall beneath the “maximum income” allowed. The Chapter 7 Means Test is used to determine whether or not a potential bankruptcy filer’s income is low enough to qualify.

What is the Chapter 7 Means Test?

The Chapter 7 Means Test is a standard used to determine eligibility to file Chapter 7 bankruptcy. Since Chapter 7 bankruptcy discharges all debts without requiring the debtor to pay them back, the eligibility requirements are more stringent in comparison to other types of bankruptcy. For many potential filers, the determining factor is income.

Do You Make Too Much Money to File Chapter 7 Bankruptcy?

In general, if you make less money than the median household income in the state in which you file bankruptcy, you pass the means test. The median household income in your state varies year to year and may also vary depending on certain factors such as the size of your household. If you fall below the median household income, you are automatically allowed to file Chapter 7 bankruptcy.

What If I Make More than the Median Household Income?

If your income exceeds the median household income in your state, you may still qualify to file Chapter 7, but you have to pass the means test. The Means Test will consider additional factors including the household’s monthly expenses. The purpose of the Means Test is to prevent people from filing for a Chapter 7 discharge when it is not necessary. The test works by considering the applicant’s income against their expenses to determine the disposable income. The higher a filer’s disposable income is, the less likely it is that they will pass the Means Test and qualify to file Chapter 7 bankruptcy.

Chapter 7 Means Test: Disposable Income Compared to Debt

Once the test determines the filer’s disposable income, it compares it to the total amount of unsecured debt. If there is enough disposable income available to pay the debts, the court will determine the filer ineligible for Chapter 7 bankruptcy. When a filer is ineligible for Chapter 7 bankruptcy , they often benefit from filing Chapter 13 bankruptcy instead.

If you have questions about filing Tennessee or Georgia bankruptcy and want to discuss how bankruptcy can offer a more permanent solution to getting out of debt, contact an experienced bankruptcy attorney. Don’t hesitate to call Kenneth C. Rannick, P.C., Tennessee, and Georgia bankruptcy attorney. We help good people through bad times.

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