When you are in an overwhelming amount of debt and have explored all of your options, you may decide that filing for bankruptcy is right for you. However, you may wonder if the income you earn disqualifies you from filing. If this represents your concerns, you’ll want to keep reading to learn about the income limits established during the bankruptcy process, as well as the importance of connecting with a Memphis, Tennessee consumer bankruptcy lawyer to discuss your options and guide you through this process.
Does Tennessee Implement Income Limits for Bankruptcy?
When you are exploring your bankruptcy options, one of the preferred choices for consumers is Chapter 7. However, it’s critical to understand that this chapter does have limitations. In order to file Chapter 7, you must pass a means test. Essentially, this compares your average monthly household income to other households of your size in Tennessee. As such, there is no standard income limit. It’s also important to understand that all income, including wages, tips, alimony, and income earned from rental property, will be taken into account when determining your monthly earnings.
It’s important to understand that if your average monthly income exceeds the median amount, you are not automatically disqualified from filing Chapter 7. In many instances, you can deduct certain expenses like your mortgage payments, court-ordered alimony or child support, and other expenses from your monthly income to help reduce your disposable income and qualify for Chapter 7. As of 2025, the median monthly income for a four-person household in Tennessee is $9,154.33
Unlike Chapter 7, Chapter 13 does not impose income limits for filers. As such, you can file for Chapter 13 regardless of what your income is.
What Are My Options if My Income Is Too High?
If you exceed the median income for households of your size in Tennessee even after deducting eligible expenses, you are not out of options. Instead of pursuing a Chapter 7 filing, you will be required to file Chapter 13. While Chapter 7 is often preferred as it is a quicker process, generally taking 6 months, one of the downsides is that you risk having non-exempt assets liquidated to repay creditors. Chapter 13, on the other hand, protects your assets, as you will instead be placed on a three to five-year repayment plan.
Filing for bankruptcy can be a confusing and overwhelming experience, which is why it’s in your best interest to connect with an experienced attorney with the Arnold Law Firm. Our team understands how difficult these matters can be to navigate, which is why our firm is committed to helping you reap the benefits of this process. When you need assistance, do not hesitate to reach out to our firm today to learn more.
