Florida residents are being burdened with overwhelming debt and it has been worsened by the COVID-19 pandemic. Many people are suffering and struggling with anxiety and depression due to the debt, layoffs, the economic shutdown and the everyday worries we all have now. A Chapter 7 bankruptcy may help people have their consumer debts discharged and allow them see the light at the end of the tunnel. Unfortunately, not everyone qualifies for this type of bankruptcy.
There are many things an attorney looks at when speaking with a debtor about filing a chapter 7 case. The assets owned by the debtor are evaluated, the monies in the bank, things that they have done in the last few years.
Debtors must pass a means test or median income test to be able to file a Chapter 7. If the income is too high they may have to file a Chapter 13 Bankruptcy and repay a portion of their debts. Often times they do not pay the entire amounts owed and it is an affordable payment.
The means test is the median income in the state where the debtor lives and the expenses are per the IRS guidelines for the county that the debtor lives in. Together these two figures are analyzed and calculate whether or not a debtor or debtors can file a chapter 7 bankruptcy based on their median income.
The applicant’s income information is calculated using the prior six month’s average for the applicant and their spouse, if applicable. The median income in the State of Florida right now for a family of 1 is $51,559.00 for a family of 2 $62,736.00 and the median income increases as the family size increases.
The means test is a complex calculation that is only an issue in about 1 out of 15 cases that I handle in my practice. Often times, the debtors may make slightly more than the median income and still qualify for a Chapter 7 Bankruptcy based on the expenses. It is advisable to bring a recent paystub to the initial consultation as many folks under estimate their income at the initial meeting. Overtime is looked at, as well as bonuses, etc.
An experienced bankruptcy attorney can educate you and advise you as to whether or not filing a bankruptcy is the most sensible thing to do in your situation. I find myself advising folks not to file very often for one reason or another as it is not for everyone. An experienced attorney can prepare a means test and determine which chapter a debtor is qualified to file for and can offer advice as to which is the best for the person to file. I have filed over 4,400 consumer cases and enjoy this practice area. I feel that I am helping people and making a difference.