A recent potential client called me telling me that based on his current income he is below the median income for the state of Florida and wondered if he can automatically qualify to file for Chapter 7 bankruptcy. Unfortunately the answer is NO, just because a debtor is under the median income for the state of Florida doesn’t mean they are automatically qualified to file for Chapter 7 bankruptcy.
In order for a debtor to qualify for Chapter 7 bankruptcy in Florida he or she must pass two tests. The first test is the means test. Any debtor whose median income is lower than that of the state automatically passes the means test. In this case the debtor automatically passed the means test because he was below the median income for his family size.
The second part of the test to qualify for Chapter 7 bankruptcy involves the debtor’s actual income and expenses. The debtor must show that based on his or her actual income and actual expenses he or she has no money left-over to pay back creditors. If the debtor’s income minus expenses is a positive number i.e. he has left over or disposable income then he will NOT be able to file for Chapter 7 bankruptcy (no matter than he is under the median income). However, if the debtor’s actual income minus actual expenses is a negative number then the debtor will be eligible to file for Chapter 7 bankruptcy.
If you are thinking of filing for bankruptcy and would like to schedule a free consultation with an experienced bankruptcy attorney then please contact Shmucher Law, PL by calling 305.741.5553 or 954.309.5559. We offer free consultations in our main Miami office as well as our satellite offices including Boca Raton, Fort Lauderdale, Plantation, and Sunrise Florida.