In the past, just about anyone could file for Chapter 7 bankruptcy. That is no longer the case. When the Bankruptcy Code was revised in 2005, a means test was added in order to ensure that a filer is not able to repay at least a portion of his or her debts. Now, this is the first step in the bankruptcy process for anyone here in Florida or elsewhere in the United States.
Depending on the outcome of the test, you will be eligible to file either Chapter 7, which is a liquidation of your debts, or Chapter 13, which is a reorganization of your debts. There are two primary parts to the test. Your income and certain expenses will be reviewed.
The U.S. Department of Justice publishes a list of annual adjusted median incomes by state. If your income is below that listed for your family size, there is no need to continue to the second portion of the test. Here in Florida, the median income ranges from $40,029 for a household of one to $65,135 for a household of four or more.
If your income is above the median, you may still be eligible to file Chapter 7. If your disposable income will not be above $100 a month over the next five years (no more than $6,000 total), you may still qualify. If your total disposable income computes out to be between $6,000 and $10,000, a closer look is in order to make a determination as to whether you qualify.
The means test can easily become complicated. An attorney can review your financial situation and help you figure out which chapter of bankruptcy you are eligible to file. Once that determination is made, the remainder of the process can be explained to you and your petition can be filed and processed.