Bankruptcy Eligibility in Tennessee

Find out if you qualify for a Chapter 7 bankruptcy.

Candidates for Chapter 7 bankruptcy include individuals, business partners, businesses, and other organizations that are currently in more debt than they can afford to pay.  It is these candidates that the bankruptcy Court and Chapter 7 are intended to help.

The first step in determining eligibility for Chapter 7 bankruptcy for individuals is to evaluate the “means test” which is designed to analyze your ability to pay back creditors.  The means test can be complicated and many who use an “online” calculator receive incorrect results.  The means test looks at an individuals household income from most sources over the last 6 completed months.  The first step is to compare this 6 month income to the median income for a household size in the state.  If the income is less than median, Chapter 7 is an option.  Even if your household income is above the median income, there is a second stage to the means test allowing for the deduction of certain expenses and debt payments to determine if the individual could afford to make any meaningful payment toward unsecured debt.  If this analysis shows no meaningful payments can be made, even though income is above the median, Chapter 7 is an option.

Business and special individuals such as those with primarily business debts are not required to complete the means test.

Along with passing the “means test”, a debtor must provide information to determine if there are other reasons to avoid chapter 7 including:

• A full list of all creditors, including the amount owed and the types of claims
• Debtor’s income information, including the source, amount and frequency
• A listing of all the debtor’s property
• A list of all the debtor’s monthly expenses

Additionally, for most, the debtor must have received court approved credit counseling within the 6 months prior to filing. Any plans for debt management that are created during credit counseling must be filed with the court upon Chapter 7 bankruptcy filing.

There is no minimum amount of debt required before a Chapter 7 Bankruptcy case can be filed. While there is no minimum, it may make more financial sense to pay off the debt rather than incur the cost of filing bankruptcy.

What would disqualify a debtor from Chapter 7 Bankruptcy?

The following is a list of circumstances in which a debtor may not be eligible to file for Chapter 7 bankruptcy:

• The debtor is capable of paying back some debts as shown by the means test
• Debt was discharged in a previous bankruptcy
• The debtor has a large amount of equity in things they want to keep
• The debtor did not receive the required credit counseling
• The debtor defrauded creditors and collection agencies

While you can file bankruptcy after a recent prior bankruptcy, if you file too soon, you may not receive a discharge of your debt. The time between bankruptcy filings is complicated and depends on the type of bankruptcy filed in the past.

Schedule a Free Consultation

If you are overwhelmed and swamped with debts, it is in your best interest to contact the bankruptcy lawyers at Long, Burnett, and Johnson, PLLC for the best legal and financial advice for your circumstance. Our attorneys are exceptionally knowledgeable in all matters pertaining to bankruptcy and finance, and will work with you to eliminate your debts as quickly and efficiently as possible. We also provide free bankruptcy consultations.