Different paths to bankruptcy relief exist because not all individuals experience the same financial challenges and difficulties. As such, a Tennessee resident who is confronting significant financial hardship may elect to file for Chapter 7 bankruptcy or Chapter 13 bankruptcy. If they wish to pursue Chapter 7 as their method of overcoming their debts they must qualify for the process by passing the legal process’s means test.

The means test is a careful examination of the debtor’s income and financial expenditures. First, the debtor must disclose their sources of income and other routes through which they may get money. To pass the first portion of the evaluation, their median intake for the six months prior to their filing for Chapter 7 bankruptcy has to be below that of the state median. If it is not then they must move onto a second level of evaluation.

The second part of the means test looks at the debtor’s necessary costs. If the debtor has money left over after they pay for all of their necessary costs and needs and could apply some of that money to their debts, then they may not qualify for Chapter 7 bankruptcy. Chapter 7 bankruptcy is generally for debtors who are unable to dedicate any of their income to the repayment of their financial obligations.

This is a simplified description of one of the most critical aspects of the Chapter 7 bankruptcy process. Debtors who are interested in pursuing it are encouraged to reach out to debt relief and bankruptcy professionals that they trust. These individuals can support their clients’ needs and help them work toward financial freedom.