A means test for bankruptcy is a tool that limits bankruptcy to only those who truly need it. Bankruptcy is not meant to be used by consumers to rack up high credit card debt and then get out of paying for them. A means test for bankruptcy will determine if you can afford pay your debts or if you should be allowed to file for bankruptcy and have your debt discharged. If you do not pass the test you will be limited to Chapter 13 bankruptcy, which is a structuring bankruptcy and you will be required to pay back some of your debt. So what can you expect in a means test and how does it work?
The first step of a means test is determining where your income lays in relation to the income in the rest of Florida. If you are below the median income, you will likely pass the means test and be permitted to file bankruptcy. Keep in mind that just because you are able to file for bankruptcy in Miami does not mean that you should, or that it is your only option. Contact a bankruptcy lawyer before deciding to file bankruptcy.
If you income is more than the average in Florida, you will move onto a more complicated part of means test for bankruptcy. In this stage, your income will be compared to your amount of debt minus some allowable spending. If your income does not allow you to pay off your debt, you pass the means test at this stage and are permitted to file for Chapter 7 bankruptcy. If your income allows you to pay off a portion of your debt, you may be denied from filing Chapter 7 liquidation bankruptcy and will not be able to file for bankruptcy, or you may qualify for Chapter 13, a restructuring bankruptcy.
If you do not pass the means test for Chapter 7 bankruptcy you will not be eligible to file for liquidation bankruptcy. However, you can still consider filing for Chapter 13. Only a bankruptcy lawyer can tell you if Chapter 13 bankruptcy is an option for you based upon your unique financial situation. In Chapter 13 bankruptcy, you will be required to pay off some of you debt through affordable monthly payments over a payment period of up to five years.
A means test will be performed by the courts prior to your bankruptcy filing. You can also use an online means test to determine how likely you are to pass. Although an online means test will not be completely accurate, it can give you a good idea of how likely you are to be eligible to apply for bankruptcy.
If you do decide that bankruptcy is an option for your financial situation, be sure you contact a bankruptcy lawyer who is qualified to help you through the process and can advise you on which chapter is the best for you.