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It's easier than you think to qualify for Chapter 7 bankruptcy

If you've been dealing with reduced income, expanding debt or collection calls, you're probably feeling quite stressed out. You may know that Chapter 7 bankruptcy offers relief for those with debt-related financial issues, but you may think it couldn't possibly work for you. People often think that bankruptcy is too difficult or that it requires that you give up everything you own.

There's good news here. First of all, you can retain some of your possessions in Chapter 7 bankruptcy, including some of the equity in your home. Secondly, if you have lower total assets and lower income, you may very well qualify for Chapter 7 bankruptcy relief, which helps you get out from under all of those monthly unsecured debt payments.

You need to pass the Tennessee state means test

In order to qualify for Chapter 7 bankruptcy relief instead of Chapter 13 restructuring of your debt, you must pass a means test. For most states, this involves comparing your adjusted household income to the state average (median) income over the most recent six months. Depending on the size of your household, there's a range of incomes that may qualify for Chapter 7 bankruptcy protections.

If you are a single person with no dependents, your adjusted income should be under $45,842. For two person households, that amount goes up to $55,759. If there are three people in your family, the amount increases to $63,865, while four person families can have an adjusted income of up to $75,152. If your income is quite close to the limit, getting expert advice can help you determine if you qualify.

Chapter 7 bankruptcy focuses on your current income

If you made great money last year before losing your second job, that won't impact your ability to file for bankruptcy. The courts will typically only look at your income over the most recent six months. If that income level is at or below the average income for a household of the same size in Tennessee, you very likely qualify to file for Chapter 7 bankruptcy.

There are many benefits associated with Chapter 7 bankruptcy. Chapter 13, which is available to anyone regardless of income, requires that those filing restructure their existing debt and make payments on it for several years. Once the person completes the payment plan, any remaining balances on qualifying unsecured debt get discharged.

In Chapter 7 bankruptcy, the discharge is much quicker. The courts will order a creditor meeting, reviewing your financial records and statements, and order a discharge if everything is in order. This provides you with a release from your obligation to unsecured debts, such as credit cards and medical expenses.

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Ben Sissman, Attorney at Law
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Memphis, TN 38103

Phone: 901-730-4958
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