Florida Bankruptcy Lawyers

In days past nearly anyone could file a Chapter 7 bankruptcy. New laws were implemented that included a formula called ‘the means test”. This helps the court decide who is eligible for filing a Chapter 7 bankruptcy. The test will confirm how your debts were incurred. Credit card debt, mortgages, consumer loans are examples. Many people have incurred debts from failed business, or business related judgments. That being the case, those people would not qualify for a Chapter 7 bankruptcy filing.

The means test will determine whether the debtor has the financial means to repay the debt through a Chapter 13 bankruptcy. If your income suggests you may be able to pay a portion of your debt back, filing a Chapter 7 will be denied. However you may be eligible for a Chapter 13 filing in bankruptcy court. This law eliminated abuse of the system by the unscrupulous individual.

How Does the Means test Work?

The means test determines and evaluates your income in comparison to the median income for households in Florida as reported by the Bureau of Census. The median income base increases with the size of your household. The means test will determine your current monthly income and this is significant. Your current monthly income is defined as the average monthly gross income received during the six full months just prior to your filing bankruptcy. You are allowed living expenses. The formula determines what are actual expenses and what is allowed. The formula starts with your current monthly income and then deducts from categories of allowed expenses to calculate your “net monthly income” which would be available to pay unsecured creditors. Your current monthly income, less your allowed expenses, is your Net monthly income.  If your net monthly income is more than the law allows, you fail the means test, which means there is a situation of abuse applied to your filing a Chapter 7 bankruptcy. Not all is lost and a consultation with your bankruptcy lawyer will help you determine whether or not you qualify for a Chapter 7 filing. No matter what lawyer you choose all will have to follow the same laws. Information is carefully calculated and determined by the formula . Failing the means test isn’t the end of the world as judges can apply special circumstances in each individual case. The burden of proof for extenuating circumstances is on the debtor. Plan to document your claim for special considerations

Is The Means Test Complicated

It absolutely can be hard for most people to understand. That why you need a Florida bankruptcy lawyer.  Bankruptcy statutes are in place to help prevent abuse of the system. If your situation is legitimate you need not fear the means test. These steps are a necessary component of filing bankruptcy in any state.It is part of the process and remember, it is a means to an end.