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Qualifying For Chapter 7 Bankruptcy Under The Means Test


If you are struggling with debt that seems unmanageable, you may have considered filing Chapter 7 bankruptcy. If you are successful with your case, any non-exempt assets you own are liquidated and sold to pay your creditors. In exchange, most or all of your debt is discharged by the bankruptcy court. Not everyone is eligible to file Chapter 7 bankruptcy, though. To do it, you will first have to pass a means test,  which means proving you earn an income below a certain level. Our Orlando bankruptcy lawyer explains further below.

How to Qualify for Chapter 7 Bankruptcy Under the Means Test

The means test has not always been a part of the Chapter 7 bankruptcy process. It was not until 2005 when Congress passed the Bankruptcy Protection Act (BAPCPA). Under this Act, borrowers must pass a means test before they can file for Chapter 7. This test requires you to show that you earn an income that is below Florida’s median income before you are eligible to file Chapter 7 bankruptcy.

Calculating whether you are eligible to file Chapter 7 is not easy. It largely depends  on your income, and the amount of people in your household. For example, a one-person household that earns an average monthly income of $4,000 may not qualify, while a three-person family with the same average monthly income might. An Orlando bankruptcy lawyer will explain the law and how it applies to your case to determine if you qualify for Chapter 7.

What to Do if You Do Not Qualify for Chapter 7 Bankruptcy

You may think that if your income is too high to qualify you for Chapter 7 bankruptcy, there is nothing you can do. Fortunately, this is not the case. If you are not eligible to file Chapter 7 bankruptcy, you can file Chapter 13 bankruptcy.

During a Chapter 13 bankruptcy, your assets are not liquidated to repay your creditors. Instead, the bankruptcy trustee will prepare a repayment plan and restructure your debt so it is more manageable for you to repay. The repayment plan typically extends between three and five years. There is no means test in a Chapter 13 bankruptcy. You can also still often discharge a significant amount of your debt in a Chapter 13 bankruptcy, giving you the relief from your debt you need.

Our Chapter 7 Bankruptcy Lawyer in Orlando Can Help with Your Case

It is not always easy to determine if you are eligible to file Chapter 7 bankruptcy. Even when you are, the process can be long and complicated and one small mistake could hurt your case. At Anderson & Ferrin, P.A., our Orlando Chapter 7 bankruptcy lawyer can advise on whether you qualify and help you navigate the process so you have the best chance of success when getting your debt discharged. Call us now at 407-412-7041 or reach out to us online to schedule a free initial consultation and to learn more about how we can help.




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