Do I Qualify for Chapter 7 Bankruptcy?

ByGoodblatt • Leo Hours Categories Bankruptcy, Chapter 7

For individuals who are struggling with personal debt, such as credit card or medical debt, there are generally two bankruptcy options: Chapter 7 and Chapter 13. Each has unique demands for the bankrupt individual and unique benefits. Although many consider Chapter 13 to be the less austere because you may keep unlimited assets, you might be in a situation in which Chapter 13 is less helpful to you than Chapter 7 bankruptcy. Whether this is the case for you depends on multiple factors, such as the reason behind your debt and your income to debt ratio.

Chapter 7 bankruptcy is only available to individuals or businesses in certain financial situations. To qualify for Chapter 7 bankruptcy, an individual with mostly consumer debt must pass the Means Test. Before moving forward with the Means Test or any other bankruptcy-related process, speak with an experienced bankruptcy lawyer.

Passing the Chapter 7 Means Test to Qualify for Chapter 7 Bankruptcy

The Chapter 7 means test starts with one simple question: do you make less money each year than the median annual income for a household of your size in your state?  If the answer is yes, you pass the test and you may file for Chapter 7 bankruptcy.

If you earn more than the annual median income for Florida, you may still qualify for Chapter 7 bankruptcy. But in order to do so, you must determine the amount of disposable income you have after paying your household expenses each month. If this amount is above a specific amount, which your lawyer can help you determine, you do not qualify for Chapter 7 bankruptcy.  You may qualify for Chapter 7 bankruptcy even with higher income if most of your debts are not “consumer debts.”  For example, if most of your debt is income tax debt – you do not need to pass the means test to file a Chapter 7.   If this is the case for you, consider filing for Chapter 13 bankruptcy or exploring alternative options with your lawyer.

Even If you Qualify, Chapter 7 Might Not be Right for You

Working with a bankruptcy lawyer will ensure that you are aware of all of your options, and that you choose the Chapter that is best for your situation.  Even if you qualify for Chapter 7 bankruptcy, Chapter 13 bankruptcy may be better for you.  For example, you can catch up your mortgage or back taxes in a Chapter 13 bankruptcy.  You may eliminate an underwater second mortgage or equity line in a Chapter 13 bankruptcy.

Work with an Orlando Bankruptcy Lawyer

If you are facing an insurmountable debt load, consider filing for bankruptcy with the aid of an experienced bankruptcy lawyer in Orlando. Do not wait to set up your legal consultation with the lawyers at the law office of Goodblatt · Leo to discuss the specific details of your case and determine your options. During this consultation, you might find out that bankruptcy is not the right choice for you. You might also find that you are an ideal candidate for bankruptcy and learn more about how to proceed with seeking the bankruptcy section that will help you the most.

Goodblatt & Leo
+ posts

Our attorneys, Amy E. Goodblatt and Tatiana Leo, have more than 55 years of combined legal experience. They are directly involved in each case and stay focused on the issues that matter most to you.

Similar Posts

  • I Filed for Chapter 7 Bankruptcy. Will I lose my Assets?

    ByGoodblatt • Leo Hours Categories Bankruptcy, Chapter 7

    If you are facing an insurmountable level of personal debt, you may be considering Chapter 7 bankruptcy. Chapter 7 bankruptcy can result in the loss of certain of your assets, but in the vast majority of cases,  the filer’s exempt assets are mostly exempt and you can retain them. An experienced Bankruptcy lawyer will work with you to determine how you may be able to retain your assets in an ethical manner. Cash Any cash you have available, either on hand or in savings or checking accounts, is an asset of your Bankruptcy estate to which the Trustee can look to pay your creditors. However, there are so many exemptions that apply to these funds, that with careful ethical planning, you may plan your bankruptcy…

  • What Are Bankruptcy Exemptions?

    ByGoodblatt • Leo Hours Categories Bankruptcy, Chapter 13, Chapter 7

    When you decide to file for Chapter 7 or 13 bankruptcy, you may fear that you will have to surrender all your assets or be restricted to subsistence income. However, this is not the case.  There are some assets that the government has no interest in taking, and there are some which will fall under what the Bankruptcy Code calls exemptions. Florida maintains a list of exemptions, so that those who are forced to file can still retain most if not all of their possessions. State vs. Federal Exemptions In Florida, unlike in some other states, a filer may not use the federal government exemptions for his bankruptcy with rare and specific exceptions.  However, it is generally considered to be a better deal, as the…

  • Misconceptions About Chapter 13 Bankruptcy

    ByGoodblatt • Leo Hours Categories Bankruptcy, Chapter 13

    When most people file for bankruptcy, they file under Chapter 7 of the U.S. Bankruptcy Code. However, there is another alternative. Chapter 13 is available to debtors who have slightly different circumstances than the average bankruptcy filer, and while there are a few more obligations to filing Chapter 13, it may benefit you more than a Chapter 7 bankruptcy. Myth: A debtor must have very low income in order to file  Chapter 13.  False – a Chapter 13 filing is actually referred to as a wage earner’s plan.  You must have enough income to be able to make monthly payments on your plan – without it, a Chapter 13 plan is not viable.  If you have very low income, a bankruptcy professional will likely counsel…

  • Top 5 Bankruptcy Myths Dispelled

    ByGoodblatt • Leo Hours Categories Bankruptcy, Chapter 13, Chapter 7, Debt Relief

    Deciding to file for bankruptcy is a huge decision. It will impact your life for years and can cause a lot of stress. But if your head is spinning with questions about how to file and what will happen if you do, then take comfort. You are not alone. CNN Money estimates that 72 percent of Americans were stressed about money in December of last year. If you are facing a bankruptcy, your first step should be contacting an experienced lawyer who can guide you through the process and help you decipher between real concerns and unnecessary fears. To illustrate, here are just five of the biggest bankruptcy myths plaguing consumers today. You have to give up everything you own. It is very unlikely you…

  • 6 Things You May Not Know You Can Do in Bankruptcy

    ByGoodblatt • Leo Hours Categories Bankruptcy

    Most people know that you can discharge credit card and medical debt in bankruptcy.  But, there are other things you may be able to do in your bankruptcy.  Let’s look at 6 of those things. Modify student loans. The United States Bankruptcy Court in the Middle District of Florida is the first Bankruptcy Court in the U.S. to offer this program.  It was created to provide a forum for debtors and lenders to discuss consensual repayment of student loans.  The goal is to facilitate communication, exchange information in an efficient and transparent manner, and to encourage the parties to reach a feasible and beneficial agreement under the administrative oversight of the Bankruptcy Court. Reduce your car payment. If you owe more than your car is…

  • Will Bankruptcy Keep Me From Getting a Job?

    ByGoodblatt • Leo Hours Categories Bankruptcy, Debt Relief

    Credit affects everything these days. From financing a new car to getting a job, we know that our credit can make a difference. It can be the difference between paying 0 percent interest for a new car or 15 percent or more. When it comes to employment, there is a lot of misinformation on the Web. So, what can you do if you are facing bankruptcy? First, finding an experienced Orlando bankruptcy lawyer is a good place to start. But after that, you may still worry. You need a job, but you also know you cannot continue sinking further into debt. As the walls close in, many consumers are left terrified that bankruptcy will cost them their jobs or make it impossible to find one…