If you are considering filing for bankruptcy, you might already know that you can qualify for Chapter 7 only if your income is sufficiently low enough. Chapter 13 bankruptcy is an option for those who are ineligible for Chapter 7. So what is the Chapter 13 bankruptcy means test in Florida? Here’s a closer look.
What Is the Chapter 13 Bankruptcy Means Test?
Usually, when people hear the term “means test” in relation to bankruptcy, they imagine the test that ensures your total household income is sufficiently low to qualify for Chapter 7 bankruptcy. However, there is no maximum income to qualify for Chapter 13 bankruptcy in Florida. The means test for Chapter 13 bankruptcy determines the following:
- Whether you have sufficient income to follow through with a payment plan
- Whether your repayment plan will last for three years or five years
- Whether your debt exceeds the debt limit for Chapter 13 bankruptcy in Florida.
This kind of evaluation of your income and outstanding debt isn’t a “means test” in the traditional sense, but many people colloquially refer to it as a means test.
How Does the Means Test Work in Florida?
The most important part of the means test for Chapter 13 bankruptcy in Florida is making sure you have sufficient income to manage your required monthly plan payment for three to five years. When you file your petition for Chapter 13 bankruptcy, you provide the following information:
- A list of your creditors and the debts you owe to them
- A list of all your property
- Details about your income, including the amount, source, and frequency
- A list of all monthly living expenses.
The court can then determine whether you can reasonably repay all or most of your debts with a Chapter 13 repayment plan. If you’re approved for bankruptcy, the court will compare your monthly income to the Florida median income for a family of the same size. This determines the length of your repayment term.
- If You Make More Than the Median: Your term will likely be five years, allowing you to pay off a greater portion of debt.
- If You Make Less Than the Median: The term will likely be for three years, so you don’t have to repay as much.
Determining the exact amount you pay each month during the repayment period is complex. This calculation takes into account your income, expenses, and other factors. The more disposable income the court says you have, the more you’ll have to pay each month. I can help you make sure you properly account for all your expenses so you aren’t stuck repaying more than you have to.
Eligibility for Chapter 13 bankruptcy — or any other kind of bankruptcy — is more complex than it seems from the outside. Figuring out your eligibility on your own can be extremely confusing, but I can help. When you feel like you’re buried in debt, it can be difficult to know where to turn. I will work with you to craft a debt relief plan to help you discover new financial freedom. Call (407) 749-0080 to set up your free consultation today.
Who Must Apply the Means Test in Florida?
Anyone applying for any chapter of bankruptcy in Florida must have their income and assets evaluated to determine eligibility. If they are eligible, their income must be evaluated to determine the length of the repayment period.
Exemptions and the Means Test
How much you must pay your creditors each month may also depend on how much non-exempt property you have. The more exemptions available to protect your property, the lower the value of your non-exempt property, and the less you may have to repay.
“Exempt” property is property deemed to be essential. Fortunately, in many cases, equity in your home is exempt. Florida has one of the nation’s most generous homestead exemptions. For most homes, you can exempt unlimited equity in your home as long as you have had it for at least 1,215 days.
There are many other exemptions you may be able to include, too:
- Savings for education
- Health savings accounts
- Equity in your vehicle (up to $5,000)
- Most life insurance policies
- Disability benefits
- Most kinds of public assistance
- Retirement savings accounts
- Personal property like furniture, electronics, etc. ($1,000 maximum, or $4,000 if you do not have to claim a homestead exemption).
Unlike Chapter 7 bankruptcy, Chapter 13 doesn’t require that non-exempt assets be liquidated. However, having more non-exempt property means you will have to repay creditors more.
The Role of a Bankruptcy Attorney
Bankruptcy Is Complex — Don’t Face It Alone
When you feel hopelessly burdened by debt, bankruptcy can be a way to start fresh — but that fresh start, unfortunately, does not come easily. An experienced bankruptcy attorney can guide you through the complexities of Chapter 13 bankruptcy and help you negotiate a fair repayment plan that meets your needs and those of your creditors. I have helped countless Floridians find a path to debt freedom, and I can help you, too.
Ready to start your journey to a brighter financial future? Call (407) 749-0080 to set up your free consultation today.
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 ]
