Anyone can file for bankruptcy — even if they have a high income. However, there are two kinds of bankruptcy for individuals: Chapter 7 is for those with a limited income, and Chapter 13 has no income limit. Determining whether you qualify for Chapter 7 bankruptcy can be confusing, as you need to see whether you pass the median income test and the means test. There are also several exceptions to these rules. Here’s a look at how to determine whether you’re eligible for filing Chapter 7 bankruptcy in Florida.
Determining eligibility for Chapter 7 bankruptcy can be confusing, but you don’t have to do it alone. I can work with you to see if you qualify and suggest alternatives if you don’t.
First: Median Income Test in Florida
In some cases, determining eligibility for Chapter 7 bankruptcy in Florida is fairly simple. If your household income is less than the Florida median income for a household of your size, you are eligible.
However, calculating your average household income can be tricky. You can’t just look at your tax return and use that number. Here’s how to find your average household income:
- Average your monthly income over the last six months.
- Once you have your average monthly income, multiply it by 12.
Here are the Florida median incomes by family size (as of April 2024):
- 1-person household: $62,973
- 2-person household: $77,639
- 3-person household: $89,908
- 4-person household: $104,069
- 5-person household: $113,969
- 6-person household: $123,869
- 7-person household: $133,769
- 8-person household: $143,669
- 9-person household: $153,569.
For households with more than nine people, add $9,900 for each additional person.
Compare the average household income you calculated to the median incomes listed above. If your income is less than the median, you most likely qualify. If your income is more than the median, you progress to the means test.
You may qualify for Chapter 7 bankruptcy even if you think you don’t. A bankruptcy attorney can help.
Next: Means Test
If your average household income is above the median, there’s still a chance you could qualify for Chapter 7 bankruptcy. If your expenses are so high that you can’t repay creditors, you may be eligible. For the means test, you need to calculate what expenses you can subtract from your average monthly income. There are national standards that sometimes restrict the total amount you may subtract for each expense. You can potentially subtract many different expenses from your income. It would be impossible to provide an exhaustive list, but these are some of the most common:
Payments on Secured Debts
If you have a monthly payment for your house or your car, you can deduct it (unless you intend to let the house or car be taken back by the lender).
Taxes
If you have overdue federal, state, or local taxes, you may deduct these from your monthly income. You also may deduct the amount in taxes you owe each month (not necessarily the amount withheld).
Deductions Required by Your Employer
If your employer requires you to put money into a retirement plan or if you have to pay for union dues or uniforms, these are expenses you can deduct.
Certain Insurance Premiums
If you have health insurance, disability insurance, or term life insurance, you can deduct your monthly premiums.
Some Education Expenses
Education expenses may be deducted in two situations: if your job requires them or if you pay education expenses for a child with a physical or mental disability.
Childcare Expenses
If you pay for babysitting or other childcare, you can deduct these expenses.
Court-Ordered Payments
If you have been ordered by a court to make certain payments (like child support or alimony), you can deduct your payments from the means test.
Caregiver Expenses
Caring for someone in your household who is elderly, disabled, or chronically ill can be expensive. If you serve as a caregiver (even part of the time), you can deduct any caregiver expenses you have.
Bankruptcy can be overwhelming, but an experienced bankruptcy lawyer can help. Give me a call at (407) 749-0080!
After you calculate your adjusted monthly income, the means test form will ask you to multiply that figure by 60. The result is the total “disposable” income you will have over the next five years. If that number is less than $9,075, you qualify. If it is more than $15,150, you generally don’t qualify, but a bankruptcy attorney may be able to help you petition for an exception. What if the number you get is between $9,075 and $15,150? In this case, you need to perform more calculations to see if you’re eligible to file Chapter 7 bankruptcy.
All of this likely sounds confusing. But don’t worry — if you work with me, I’ll be with you every step of the way.
Exceptions to Means Testing Rules
Bankruptcy laws are already complex, but they are further complicated by several exceptions to means testing rules. Exceptions for business debt in Florida are important to keep in mind. If the debt that is causing you to consider filing for bankruptcy is primarily business debt (debt you incurred for the purpose of making a profit), you don’t have to pass a means test to file Chapter 7.
Another exception is for disabled veterans. If you have a disability rating of at least 30% and you incurred debts while performing homeland defense activities or on active duty, you do not have to pass a means test. If you meet the criteria for either exception, you’ll need to file a form explaining your situation.
A Bankruptcy Lawyer Can Help
The decision to file for bankruptcy is a highly stressful one. Ultimately, it’s a step forward into a new life of financial freedom. If you are ready to file for bankruptcy or are weighing your options, please don’t hesitate to reach out to me. Keep in mind that the means tests outlined above are general guidelines, and there may be exceptions. Even if you think you may not qualify for Chapter 7 bankruptcy, I can look over your finances with you and help you determine whether that is an option.
I have extensive experience helping people just like you get out from under what can feel like a crushing amount of debt. Give me a call at (407) 749-0080 to start working toward a debt-free life.
Attorney Lewis Roberts
The weight of debts that one cannot pay carries financial stress into every waking moment. It is time for this to end. Lewis Roberts, PA, offers solutions to relieve these worries. With over 20 years of experience in helping individuals overcome the burden of debt, bankruptcy attorney Lewis Roberts presents a range of options tailored to each unique situation. Clients can trust his advice on any matter related to debts, as he identifies appropriate options and explains the paths to debt relief clearly and carefully. This ensures that clients make the best decisions for their future. [ Attorney Bio ]
