The Bankruptcy Means Test

Do I Qualify for Chapter 7 Bankruptcy in Florida?

For a person to file for bankruptcy under Chapter 7 of the U.S. Bankruptcy Code, he or she must first pass the means test. This is a test that evaluates the debtor's income to determine whether he or she has enough money to make payments with a Chapter 13 repayment plan.

Passing the Means Test

Before you take the test, you should see whether you are exempt from it in a consultation with an attorney. Typically, if your debts are anything other than primarily consumer debts, you are exempt. In addition, you are exempt from this test if you are a disabled veteran and you primarily accrued your debt during active duty or during homeland defense activity.

There are two main steps to passing the means test:

  • First, the debtor must make less than the median income for the state.

The Florida median income will be determined based upon the average income for households of the same or similar size, obtained from reports generated by the U.S. Census Bureau. If the debtor passes this part of the means test, he or she can move on to file for bankruptcy. If the debtor makes more than the median income, he or she will proceed to the second part of the test.

  • The second part of the means tests involves the evaluation of the debtor's income in relation to necessary expenses.

This establishes the debtor's net monthly income. If taking the means test, making sure your income and expenses are properly reported is essential. Depending on your income and expenses, you may or may not have the opportunity of passing the means test to file a Chapter 7 bankruptcy. Those that are not eligible under Chapter 7 may still be able to file for other forms of bankruptcy.

Find out More about Your Options with LeavenLaw!

By talking to a St. Petersburg bankruptcy lawyer about your options in this regard, you can find out whether you may pass the test and can also find out more about the particular advantages associated with Chapter 7 bankruptcy as opposed to Chapter 13 bankruptcy. With a thorough review of your case, you may even find that Chapter 7 is not the right option for you, or that you may be able to pass the means tests even when you thought this was not possible.

Contact LeavenLaw today to learn more about your legal options.