You’ve probably heard that Congress, at the behest of the credit card industry, re-wrote the entire bankruptcy law in 2005.  One of the biggest changes was the requirement that all people whose debts are primarily consumer debts (remember the credit card companies) must go through what’s called the “means test.”

The Means Test was designed to qualify families into a forced Chapter 13 bankruptcy which requires repayments of a portion of your debts over a period of time.

The means test usually will determine whether you can file a Chapter 7 case or will be forced into a Chapter 13.  In Knoxville, even after the 2005 changes, most bankruptcy cases are filed as Chapter 7 cases.

If you have a higher than average income (as determined by the government) then you’ll likely be in a Chapter 13.

Many people worry that the application of the means test will force them into a Chapter 13 when they really don’t own anything but their home and cars.  Only an experienced bankruptcy lawyer can properly evaluate whether you will be approved to file a Chapter 7.  Remember that most cases are filed under Chapter 7 so perhaps yours will be as well.

A Chapter 13 is not a disaster for most folks.  You normally will end up paying only a small amount of money to your unsecured creditors, like credit cards.  The trade is that you can make up back-payments on your home or your car over 3 to 5 years.  Sometimes that’s really a huge help to keep a family in their home.