Can you pass the Florida Bankruptcy Means Test? Key Factors to Consider

These days, many people are facing a lot of financial issues where their debts are too much, but they are not able to afford the repayment installments to their creditors. In that case, the Florida Bankruptcy Means Test helps them to check whether they are able to afford the repayment installment or not, and to find a solution for it accordingly.

The Florida Bankruptcy Means Test is a specific evaluation that helps to determine a fixed amount and term length of payments that bankruptcy applicants make to creditors to repay their debts. The reason behind the Bankruptcy Means Testing is to check whether the bankruptcy applicants are able to make full or partial repayments to their creditors if they can afford to do so. In this way, many bankruptcy applicants receive some financial relief.

Now moving forward to understand the Factors that should be considered for the Florida Bankruptcy Means Test. Here, we understand the simple factors through which the court determines whether your case falls under the Chapter 7 Bankruptcy or Chapter 13 Bankruptcy Option.

Factor 1: Comparison between Household Expenses and Median Income
Here, the individuals can calculate their household expenses and compare them with the state’s median income to check their eligibility for the bankruptcy option. If the household expenses are less than the median income, then this is the Chapter 7 Bankruptcy Means Test, where the client can easily apply for Chapter 7 Bankruptcy, and if the household expenses are more than the median income, then this is the Chapter 13 Bankruptcy Means Test. On the basis of household sizes the bankruptcy applicants can calculate their income for example: as per the US Department of Justice Figures, the median income for the state of Florida are $40,029 for a household consisting of one person, $50,130 for a household consists of two person, $54,594 for a household consists of three people and $65,135 for a household consists of four or more person. For this, you need to use the average income over the last 6 months to get an accurate calculation.

Factor 2: Monthly Living Expenses
Here, the individual shares all their expenses, including rent, food bills, transport, medical bills, electric bills, water bills, and many more. Even if they are earning more and their expenses are high, they still have the chance to fall in the Chapter 7 Bankruptcy category to get maximum relief from their debts.

Factor 3: Disposable Income
After sharing all of the expenses, including household and other expenses, the individual now has to show the court what amount is left after deducting all the expenses from the income in order to check whether they are able to afford the repayment to the creditor. In this way, the court decides whether the client applies for the Chapter 7 Bankruptcy or the Chapter 13 Bankruptcy.

What happens after the Bankruptcy Means Test?

The main question on everyone’s mind is what happens after the Bankruptcy Means Test?

If the individual passes the test, then they are eligible for the Chapter 7 Bankruptcy, where the unsecured debts are discharged, but there are some conditions applicable to the applicants that they need to accept. On the other hand, if an individual fails the Bankruptcy Means Test, then they are not eligible for Chapter 7 Bankruptcy; instead, they have to apply for Chapter 13 Bankruptcy, where they need to make repayment to the creditors.

Understanding the Bankruptcy Option: Chapter 7 and Chapter 13 Bankruptcy

Bankruptcy is designed to help all those people who are facing financial challenges, who borrow huge amounts of money from creditors, and fail to make repayment installments. In that case, these two bankruptcies help them in order to provide them with some relaxation from their debts. Here is the detailed explanation about the Bankruptcy option that serves different financial conditions:

1.Chapter 7 Bankruptcy: This is designed for those individuals who are not able to afford the repayment installment, so most of their debts are discharged altogether under one condition, where they need to forfeit some assets to release their debts from the creditors. It removes most of the unsecured debts. Here, the whole process usually takes up to 3-6 months to settle down.

2. Chapter 13 Bankruptcy: This is designed for those individuals who are eligible or able to afford the repayment to the creditors. It is a structured repayment plan; in this way, you can pay the debt within 3 to 5 years, depending on your income. As compared to Chapter 7 Bankruptcy, the Chapter 13 Bankruptcy takes more time for settlement.

Get guidance from SunCoast Law

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