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In order to qualify for the debt forgiveness of a Chapter 7 bankruptcy in Tennessee, you must pass a means test. Even veterans must include their income with few exceptions as part of the test showing whether or not you can afford to repay your debts. Income is included along with the family size and debt to determine whether or not you pass the means test.

Nerd Wallet says the purpose of the means test is to clarify “whether you’re eligible for Chapter 7 bankruptcy or confined to Chapter 13.” Chapter 7 is for debt forgiveness while Chapter 13 restructures your debt. Both types of bankruptcy use a means test, but Chapter 7 is the only one that uses it for eligibility.

For the past six months, the court allows you to factor in the loss of income due to a job loss. Each state has a median income you need to fall below to qualify for Chapter 7. The court looks at the household income which does include any non-disability VA benefits.

After determining your six-month income, the court wants a list of the expenses incurred during that time. Allowable expenses include medical costs, rent, clothing and groceries. Consistency and thoroughness are key to not having the case thrown out in court.

Any leftover money after you subtract expenses from income can be used toward debt repayment. This is the place where many people make mistakes and improperly document what they need to which can result in a failed test. This information is intended only to educate and should not be interpreted as legal advice.