Memphis Bankruptcy Attorney For Debt-Relief

The Means Test for Memphis Bankruptcies

Bankruptcy Means Test - Do you qualify for Chapter 7
Significant debt can be a stressful endeavor, and in many cases, debtors are just looking for a fresh start. Although nobody wants to go through bankruptcy, Chapter 7 bankruptcy can provide debtors with that fresh start, as it wipes out debt through the liquidation of assets.

While serving the Memphis area for more than 20 years, Memphis bankruptcy attorney John E. Dunlap, P.C. understands that bankruptcy may be the only option, but by effectively filing for Chapter 7 bankruptcy, you can give yourself that fresh start, get your debts paid, and move on with your life.

If you’re planning on filing for Chapter 7 bankruptcy, you must pass the Means Test first. Below, you can find all the information you would need to understand and take the Means Tests for Memphis bankruptcies. In the meantime, when planning for Chapter 7 bankruptcy, it is essential to have a Memphis bankruptcy attorney at your side. From strategic counseling to diligently representing your interests in Bankruptcy Court, Attorney John E. Dunlap can guide you through this process. Feel free to visit our Memphis office at 3294 Poplar Avenue, or give us a call for a free consultation at (901) 320-1603.

Understanding the Means Tests for Memphis Bankruptcies

Chapter 7 bankruptcy is essentially a liquidation of your assets, where a trustee collects then sells any non-exempt assets, paying you (the debtor) any amount exempted. The proceeds from the liquidation are then distributed among your creditors, and a commission is paid to the trustee who oversaw the distribution. To file for Chapter 7, however, you must pass the Means Test.

The Means Test generally only applies to high-income households, and if your household is below the median income for Tennessee homes, you are effectively exempt from the test. If your income is higher than the median, the Means Test determines if you’re able to pay back some of your unsecured assets through a Chapter 13 bankruptcy. Therefore, this test limits the use of Chapter 7 for people who truly cannot pay their debts through normal channels.

Median Income for Tennessee Homes

The Means Tests is essentially a calculation of your monthly household income to see if you apply for Chapter 7 or Chapter 13 bankruptcy. Therefore, if the average income is less than the Tennessee median, you pass the test and are eligible for Chapter 7. To determine this income, the Bankruptcy Court where you are filing for Chapter 7 averages your monthly income for the last six months. After determining this average, it is multiplied by 12 to determine the average annual income. Currently, the average median incomes for Tennessee homes is as follows:

  • 1 Person Household: $39,759
  • 2 Person Household: $48,053
  • 3 Person Household: $56,042
  • 4 Person Household: $62,805
  • 5 Person Household: $70,905
  • 6 Person Household: $79,005
  • 7 Person Household: $87,105
  • 8 Person Household: $95,205
  • 9 Person Household: $103,305
  • 10 Person Household: $111,405

How to Take the Means Test

If you’re household income is above the median, but you’ve recently experienced a loss of income, it could help to wait a couple months before filing. Otherwise, you still have a few options. For example, if your income is over the median, you can then complete the test by calculating income and expense. Income is considered by the State of Tennessee as business income, rental income, interest and dividends, pensions, retirement plans, and even unemployment income.

Calculating your expenses is dependent on national, Tennessee, and local expenditure standards, all of which come from the Census Bureau and the IRS. After expenses, if your average monthly income is equal to or less than $7,475, then you pass the test. If it is above $12, 475, then you can only file for Chapter 13 bankruptcy. If it is between these two numbers, then you may have to do other calculations to see if your case is truly genuine and applicable by law.

Contact Memphis Bankruptcy Lawyer John E. Dunlap, P.C. Today

Taking the Means Test and filing for Chapter 7 bankruptcy may not be ideal, but it does provide several benefits, most importantly that of getting you out of debt. The entire process can be incredibly complex, but at the Law Firm of John E. Dunlap, our expertise helping hundreds of Memphis residents allows us to effectively and efficiently get you through this process. Although we cannot make any guarantees, our record of successes in bankruptcy cases makes us confident that we’ll be able to help you too.

For a free consultation regarding your circumstances, contact Attorney John E. Dunlap, P.C. today at (901) 320-1603.