Florida couples who are experiencing financial struggles often search for the debt relief option that will work best for them. For many, filing for bankruptcy will be the best option. Once that decision is made, the next hurdle is to determine whether Chapter 7 or Chapter 13 bankruptcy will provide the best outcome.
In most instances, the means test will control that determination. However, there are instances in which a couple can file a Chapter 13 even though they are eligible for a Chapter 7. A U.S. Bankruptcy Court recently ruled that an elderly couple filed their Chapter 13 in good faith despite the trustee’s protestations. The court determined that the reasons for their “fees only” filing made sense and passed all of the prerequisites.
The couple lives on Social Security benefits and takes care of their daughter who was in an accident. They qualified to file a Chapter 7, but they could not afford to pay their attorney under that chapter. Therefore, they decided to file a Chapter 13 and structured their repayment plan to pay their attorney, bankruptcy fees and other debts in a way that caused concern for the trustee. However, numerous courts have approved plans such as this couple’s, and the court’s ruling reflects that.
Florida couples are not always bound by the results of the means test when it comes to filing either a Chapter 7 or Chapter 13 bankruptcy. Precedent exists that supports a deviation from the means test if the situation warrants it. Each filer’s circumstances are unique, and that needs to be taken into account by everyone involved. The ultimate goal of the U.S. Bankruptcy Code is to provide people who are struggling financially with a fresh start – no matter how that might best be achieved.
Source: Bloomberg BNA, “Elderly, Ailing Couple Can File ‘Fees Only’ Ch. 13 Plan”, Diane Davis, Aug. 12, 2016