Filing for bankruptcy provides many people with the financial fresh start they need following serious challenges with credit card bills or medical bills. Unfortunately, in some cases, those filing for bankruptcy were taking advantage of the ability to discharge debts. Therefore, in 2005, Congress passed legislation requiring those filing for bankruptcy to meet specific eligibility requirements regarding their debts as well as their income. This is called the “means” test, and while you do not need to pass the test to file a bankruptcy if you fail the test your case is presumed to be an abuse of the system and you will have to fight for your survival in the system. You qualify in the state of Florida by providing evidence that your income is below the median income in Florida for your family size. Alternatively, a debtor may choose to use the full means test which will examine your monthly income and expenses to show that no disposable income remains each month.
The Means Test
Chapter 7 bankruptcies allow debtors to discharge (eliminate) many of their consumer debts such as credit card debts and medical bills. The means test allows the state of Florida and the bankruptcy courts to determine if a debtor truly does not have the financial ability to repay their debt obligations. If a debtor is determined to have the financial ability to actually repay their own debts, they still have the option to file for Chapter 13 bankruptcy, which does not discharge debts, but rather will allow a debtor to develop a repayment plan that gives them more time (typically 3-5 years) to repay these debts. The means test allows the bankruptcy courts to ensure that a debtor is not attempting to defraud the bankruptcy court by simply declaring bankruptcy because they do not want to pay their bills.
How a Debtor Passes the Means Test
The first way to pass the means test is to show that your income is actually below the median income in the state of Florida for your specific family size. The chart specifically identifies the amount of median income as determined by the census in the state. If you do not meet this standard after examining your finances, there is still another way to file for Chapter 7 bankruptcy and have your debts discharged. You must provide a complete and detailed analysis of all of your monthly income and expenses to the court to illustrate how your specific situation does not leave any disposable income at the end of every month in order to qualify for Chapter 7 bankruptcy. Again, if you are unable to qualify for Chapter 7 bankruptcy due to the means test, you will still have the option of filing Chapter 13 bankruptcy to reorganize your debts into manageable payments.
Contact Us Today for Professional Help
Navigating the different types of bankruptcies as well as the laws that apply to each can be challenging and complex. At the law offices of Julianne Frank, Esq., we can help you through the entire bankruptcy process, and help you understand your legal rights. Call a dedicated Jupiter bankruptcy lawyer at (561) 220-2528 for a free consultation today.