If you are considering bankruptcy, it is important to know whether you are eligible to file under Chapter 7. The “means test” determines if Chapter 7 is an option for you. The Fort Lauderdale bankruptcy attorneys at Anidjar & Levine advise residents in South Florida in the area of bankruptcy law. Our team of capable and experienced attorneys are prepared to answer your questions regarding whether Chapter 7 or Chapter 13 is appropriate for your case. Contact our office to learn more about bankruptcy and how it can impact your financial situation.Means Test
Chapter 13 bankruptcies offer a range of benefits to Florida residents, but many prefer to file for bankruptcy under Chapter 7. Unlike Chapter 13, Chapter 7 does not require a debtor to repay his or her debts, and the case is usually completed within a matter of months. However, Chapter 7 is designed for individuals who truly cannot afford to pay their debts. If you would like to file for Chapter 7 bankruptcy, you have to overcome a presumption of abuse by passing the “means test.”
The “means test” is designed to prevent high-income individuals from completely eliminating their debts. A high income, however, does not mean you are automatically ineligible for Chapter 7 bankruptcy. You can still qualify if you have significant debt, but the law requires you to pass the means test to proceed with Chapter 7 bankruptcy. To overcome the presumption of abuse and pass the means test, you must complete bankruptcy form 22A.Bankruptcy Form 22A
This is the means testing form. It requires that you provide certain financial information to determine whether your petition for Chapter 7 bankruptcy raises a presumption of abuse. Under certain circumstances, you may automatically overcome a presumption of abuse, such as if you are a disabled veteran or have primarily business debts. In most cases, however, you will have to make several calculations to determine if you pass the means test.
Some of these key calculations include:
- Your monthly household income and how it compares to the median income for a Florida household of the same size as yours. Your monthly income is based on your income from the six months before you file. If your income is less than the median, you pass the means test. If it is higher, you need to make further calculations.
- Marital adjustments, if you believe that some of your spouse’s income should not be included in your income figure.
- Your living expenses and any debt payment deductions. For certain categories of living expenses, such as food and clothing, you must use predetermined national or local figures instead of your actual expenses. You can use actual figures for other necessary expenses, such as childcare.
- Deductions for payments on any secured debt for the next five years. For example, if you have a mortgage on your home, you should list the lender, the property, and your average monthly payment for the next five years. You should also include any other secured claim payments, such as arrearage, and certain priority claims, such as child support, and divide these amounts by 60 to come up with a monthly figure.
- Monthly disposable income. Once you calculate your deductions, you can determine your monthly disposable income. Every three years, the government sets specific figures to determine whether an income raises the presumption of abuse. If your monthly disposable income is less than the amount, the presumption of abuse does not arise and you are eligible for Chapter 7 bankruptcy. If it exceeds a specific amount, then the presumption of abuse arises and you cannot seek relief under Chapter 7. If the amount falls between the two figures, you must make further calculations.
The means test determines if Chapter 7 bankruptcy is an option for you. A knowledgeable Florida bankruptcy lawyer can provide the guidance you need to complete this complex and involved test.Discuss Your Bankruptcy Matter with Hollywood Attorneys
The Hollywood bankruptcy lawyers at Anidjar & Levine can offer the seasoned and personalized legal representation you need for your bankruptcy case. We can discuss with you whether you qualify for Chapter 7 under the means test, or if Chapter 13 is a more viable option in your case. We serve clients in Broward and Miami-Dade Counties. Call us today at (800) 747-FREE or complete our contact form to schedule an initial consultation at no cost.