How to Pass the Chapter 7 Means Test in Tennessee

Verner Smith

Quick Summary: The Chapter 7 means test helps determine whether your income is low enough to file for Chapter 7 bankruptcy in Tennessee. Even when gross income is above the state median, you may still qualify after allowable expenses are deducted. A bankruptcy attorney can help you complete the calculation accurately and evaluate the right path forward.

For many people in Jackson, TN, Madison County, and across West Tennessee, the means test is one of the most intimidating parts of considering bankruptcy. The good news is that it is a formula—not a judgment about whether you work hard or deserve relief. At the Law Office of T. Verner Smith, we help clients understand the numbers, gather the right documentation, and determine whether Chapter 7 Bankruptcy may be available.

What Is the Chapter 7 Means Test?

The means test is a two-part review used in many consumer Bankruptcy cases. Its purpose is to determine whether filing under Chapter 7 could create a presumption of abuse. In plain terms, it first compares your income to Tennessee’s median income for a household of your size. If your income is above that threshold, it then looks at allowed expenses to estimate whether you have meaningful disposable income available to pay unsecured creditors.

Having income does not automatically disqualify you from Chapter 7. Many working people qualify because their necessary household, transportation, medical, tax, and family-support expenses leave little or no disposable income.

Part 1: Compare Your Income to Tennessee’s Median

The first step uses your “current monthly income,” which generally means the average income received during the six full calendar months before you file. It is not simply your salary on the day you meet with an attorney, and it is not necessarily the same as your annual income.

For Tennessee cases filed on or after April 1, 2026, the annual median-income figures are $63,979 for a one-person household, $82,846 for two people, $97,511 for three people, and $109,585 for four people. Add $11,100 for each person above four. These figures can change, so it is important to check the current U.S. Trustee Program means-testing data before filing.

If your six-month average is below the applicable Tennessee median, you will usually pass this portion of the means test. If it is above the median, that does not end the analysis—it simply means you move to Part 2.

Part 2: Subtract the Expenses the Law Allows

When income is above the median, the next form applies a detailed expense calculation. Some expenses use IRS National and Local Standards, while others may be based on your actual, documented costs. The result is designed to estimate disposable income, not merely to total the bills you paid last month.

Common deductions can include:

• Mortgage or rent: Housing costs may be considered under the applicable local standard, with certain actual secured-debt payments addressed in the calculation.
• Vehicle expenses: Transportation standards, vehicle ownership or lease payments when allowed, insurance, fuel, maintenance, and necessary operating costs can matter.
• Health insurance and medical costs: Health insurance, certain out-of-pocket medical expenses, and other qualifying healthcare costs may be included.
• Child support and family obligations: Court-ordered child support, alimony, and certain other domestic-support obligations are important parts of the analysis.
• Taxes: Required federal, state, and local tax obligations may be deductible.
• Reasonably necessary living expenses: Food, clothing, utilities, and other essential household expenses may be calculated using the applicable standards and facts of your case.

Details matter. An overlooked deduction or incorrectly averaged income figure can change the outcome, which is why a careful legal review is valuable before filing.

Timing Can Change the Means-Test Result

The means test is sensitive to timing because it looks backward over six complete months. Overtime, bonuses, seasonal work, commissions, self-employment income, or a temporary second job can raise the average even if that income is no longer coming in. On the other hand, a recent job loss, reduced hours, or major change in household circumstances can affect the analysis and may need to be explained through the appropriate forms and documentation.

The Law Office of T. Verner Smith reviews the timing of a potential filing with clients in Jackson, TN, Madison County, and throughout West Tennessee. In some situations, a short delay or a prompt filing may substantially affect the six-month income window. The right choice always depends on the complete facts—not a quick online calculator.

What If You Do Not Pass the Means Test?

Not qualifying for Chapter 7 does not mean bankruptcy is off the table. Chapter 13 Bankruptcy may allow you to protect property, catch up on missed mortgage or vehicle payments, and repay some debts through a court-approved plan, often over three to five years.

Chapter 13 can be a practical option for people with regular income who need time and structure. We can explain the differences between Chapter 7 and Chapter 13 in a free bankruptcy consultation and help you consider which approach fits your household’s needs.

Get a Clear Answer Before You File

A means-test calculation is only one part of a bankruptcy case. Household size, income sources, secured debts, support obligations, property, and recent financial changes can all affect the analysis. Our experienced local firm takes the time to understand your situation and explain your options in straightforward terms.

If you are considering bankruptcy in Jackson, TN, Madison County, or elsewhere in West Tennessee, the Law Office of T. Verner Smith is here to help.

FAQ

What income counts for the means test?

The calculation generally includes income received during the six full months before filing, including wages, overtime, bonuses, commissions, business income, and some contributions to household expenses. Certain benefits may be treated differently. A lawyer can review your specific income sources.

Can I include my spouse’s income if we file separately?

Usually, the means test considers household income, even when only one spouse files. However, an adjustment may be available for amounts a non-filing spouse uses to pay expenses that are not part of the filer’s household. The details are important.

What if my income fluctuates?

Fluctuating income is common for hourly workers, sales professionals, contractors, and business owners. The six-month averaging rule may not reflect your future income, so documentation of changing circumstances can be especially important.

What if I just lost my job?

A recent job loss may affect both your current financial picture and the best timing for filing. Because the means test uses a historical six-month average, speak with an attorney before filing so the change can be evaluated correctly.

Schedule a Free Bankruptcy Consultation

Do not assume you cannot qualify for Chapter 7 simply because you have a job or earn more than the median-income figure. Contact the Law Office of T. Verner Smith to schedule a free bankruptcy consultation. Call or text 731-423-1888 or 731-244-2868 to discuss your options.