Do I Qualify for Bankruptcy in Florida?

 Posted on September 24, 2020 in Bankruptcy

Finding yourself drowning in debt is never the place that anyone expects to see themselves a few years down the road. Unfortunately, life can serve you with unforeseen circumstances—an ongoing illness that requires regular treatment or the loss of a job and regular income—and you can quickly see your debts piling up. Filing for bankruptcy is often people’s last resort; however, you may come to the realization that you actually do not qualify for bankruptcy. Depending on a number of factors, you may or may not be able to take this route when trying to get your finances under control. While it is always best to consult a bankruptcy attorney to know for sure, you may conduct your own financial analysis first to determine whether or not filing for bankruptcy is an option for you.

Passing the Means Test

There are two common ways to file for bankruptcy: Chapter 7 and Chapter 13. Chapter 7 bankruptcy involves the liquidation of your assets, then using these liquidated funds to pay off your debts. Not all assets are eligible, allowing you to keep a number of your assets in the process. Chapter 7 bankruptcy provides you with a financial fresh start once the legal process is complete. Sounds like a great option, right? While this type of bankruptcy is helpful for many families, not everyone qualifies to use its benefits. In 2005, a means test was created in order to make it more difficult for wealthy consumers to file for Chapter 7 bankruptcy. The test uses Florida’s median family income for your household size as an indicator of your eligibility. In 2018, this income threshold totaled to $53,267 per household. In other words, if your household makes less than this amount, you automatically qualify for Chapter 7 bankruptcy. If, however, your household has a combined income that is higher than this amount, you will need to follow additional steps to determine your eligibility. 

The means test expands to include additional paperwork for those who exceed the median household income. You will need to fill out forms that report your current monthly income and the Means Test calculation. The state will apply a more complex equation to your household income and expenses, deducting several types of “allowed expenses” from your income and assuming that the remaining income amount can be used toward paying off your creditors. The means test will typically involve a detailed analysis of your income and expenses. Since the process can be rigorous and highly detail-oriented, it is always advisable to discuss your financial situation with an attorney throughout the process.

Contact a Fort Lauderdale, FL Bankruptcy Lawyer

Finding yourself in financial disarray can be extremely unnerving and leave you unsure of how to resolve the debts that are continuing to accumulate. As explained above, you may conduct your own basic means test to see if Chapter 7 bankruptcy is an option. While it is a good idea to do your own research, be sure to consult a Broward County bankruptcy attorney before writing off this option. Elliot Legal Group, P.A. has helped numerous Floridians repair their financial divots so that they can come out stronger on the other side. Attorney Gavin Elliot is dedicated to guiding you through the bankruptcy process or finding a valid alternative for those who do not qualify. To discuss your financial situation and determine which path is best for you, contact our firm today at 754-332-2101.

Sources:

https://www.floridabar.org/public/consumer/pamphlet008/

https://www.census.gov/quickfacts/fact/table/FL/INC110218