Means Test for Chapter 7 Bankruptcy

Means Test for Chapter 7 BankruptcyIf you are considering filing for bankruptcy in Florida, it’s possible that you may be facing an overwhelming amount of choices. It’s likely that you have evaluated your financial situation and projected what it would be like if you continued to stay on this path for the next few years. Dodging calls from creditors and falling behind on your debts only leads to the bills piling up. You may project yourself only having a few more months before you are unable to afford even the most basic expenses. If you’ve been avoiding important debts for some time and it’s a constant stress in your life, it might be possible for you to qualify for bankruptcy to completely wipe away these debts. Going online to research for answers might only leave you with more questions. You might be eligible for chapter 7 bankruptcy but you could have multiple assets that you may lose in the process. Fear of losing these assets is the primary factor pushing people away from the process. There’s also the confusing and intimidating recovery process you get after bankruptcy. A means test for chapter 7 bankruptcy is the primary guiding standard judging if an individual can file for it.

If you are interested in discharging the majority of your debt and walking away without any type of repayment plan, chapter 7 bankruptcy is the type of bankruptcy that you will want to file for. Passing a means test for chapter 7 bankruptcy is not always easy however. In this article were going to explain more on the process of passing the means test in Florida!

Why is There a Means Test?

When you file for Chapter 7 bankruptcy it indicates that you are extremely deep in debt and you’re unable to utilize a repayment plan to pay back even a portion of your debt. Chapter 13 simply modifies your current debt situation so that you can cover some or all of your debt in a rigorous repayment plan over the next 2 to 3 years.

Individuals that have accumulated a massive amount of unsecured debt are primary looking for a chapter 7 instead of 13. It may be possible however for a person that is interested in using chapter 7 to make a few modifications and identify a method that they could use to adjust their debts and repay some or all of them. A financial means test is designed to find the best path forward for a new financial start and if it is possible for a person to complete the reorganization that’s necessary for Chapter 13 bankruptcy. The means test also works to prevent people from abusing chapter 7 bankruptcies.

There are a few financial situations that could leave you completely exempt from taking the financial means test. If all of your debts are not consumer debts, you will not be required to take a financial means test. If liabilities are mainly consumer debts and you are disabled veteran that accumulated these debts during active duty, you will also not be required to take the financial means test.

Income Limits

The financial means test also has income limits. There are some situations where you can automatically qualify for Chapter 7 bankruptcy and you will not be required to take a means test. The state of Florida has an income table for households based off of the members of each household. It takes a median income level based off of your salary for the last six months being  doubled as an annual salary. If your annual salary based off of the last six months of wages falls below the median line, you can automatically qualify for Chapter 7 bankruptcy.

Annual median levels for household sizes in Florida start with

 $49,172 for one person

$60,400 for two people

$66,872 for three people

$78,833 for four people

If You Exceed The Income Standards

If your income dropped dramatically in the last six months it may be wise for you to wait a few months to see if you can fall below the median level. Exempting yourself from the financial means test can be the fastest way to file for Chapter 7 bankruptcy.

If your income levels still continue to exceed annual median income levels, you could still file for Chapter 7 bankruptcy by calculating your income and deducting allowable expenses. If you subtract allowable expenses such as your mortgage from your declared income and you have a total monthly income that is less than $7475 you can pass the means test and file for Chapter 7 bankruptcy. If you have a disposable monthly income in excess of $12,475 you will be unable to file for Chapter 7 bankruptcy.

Depending on your financial situation it may be advantageous for you to consider Chapter 13 bankruptcy if you have some disposable income available. Speaking to a Florida bankruptcy attorney can help to explain the situation further and present the options to you. Contact us today to speak to a qualified bankruptcy attorney!