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A lawyer can help with the bankruptcy means test

Tennessee debtors worried about their financial future may feel overwhelmed by financial challenges, but bankruptcy may be an option. But, getting over the mental hurdles of bankruptcy can be hard, even though it is a time-tested and legal debt relief solution. Having legal assistance to walk the person through the process is essential, like understanding the means test.

The means test does not exclude people from filing for bankruptcy. It is a method to determine whether it would be better for the debtor to file for Chapter 7 or Chapter 13 bankruptcy. These are the chapters that are most commonly used by individuals.

Chapter 7 is also referred to as a "liquidation" bankruptcy as certain properties are sold to pay back as much as possible to creditors. Some properties are protected in the Chapter 7 process. It can completely clear unsecured debt and possibly some secured debt.

The means test is used to decide whether the person qualifies for Chapter 7. It will examine the debt and see if it is predominately consumer debt. If so, it will then be examined whether the household income is less than the median income level.

Passing both of these criteria is sufficient to pass the means test. Even those who are above the median level might qualify for Chapter 7. The idea behind the means test is to help debtors get their Chapter 7 and steer debtors who do not qualify for Chapter 7 toward Chapter 13. Chapter 13 is when there is a three-to-five-year plan for some of the debts to be paid back.

Debtors who are thinking about filing for bankruptcy should have a basic understanding of the bankruptcy process and the means test to make sure they are choosing the right alternative for their specific needs. Whether it is a Chapter 7 or Chapter 13 or another strategy, the means test will be important. Speaking to a legal professional who specializes in debt relief can help.

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Kenneth C. Rannick, P.C.
4416 Brainerd Road
Chattanooga, TN 37411

Phone: 423-954-7180
Phone: 423-624-4002
Fax: 423-624-0509
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