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Is Bankruptcy The Answer?


If you’re struggling with ever-increasing debts and feel like you’ll never be able to get back on your feet, sometimes filing for bankruptcy might be your only option. Although the majority of us tend to look down on the idea, the fact is that it can be a great way to help people finally get rid of their crippling debts and start fresh. Still, how do you know if bankruptcy is right for you?

The Bankruptcy Means Test

The first step towards determining whether you can file for bankruptcy—and also what type of bankruptcy you are eligible for, i.e. Chapter 7, 13 —is to take what’s known as a Means Test. This test is designed to show whether your income is low enough to file for Chapter 7 bankruptcy, or if instead your current level of income would allow you to pay back part of your debts through a Chapter 13 bankruptcy plan.

There are actually several steps to the Means Test, the first of which compares your current average monthly income for the past 6 months against the median income in Florida for a household of your size. If you’re income is lower, then you should automatically qualify. However, if it exceeds the median income, the Means Test then moves on to deduct your living expenses to arrive at your disposable income, which is then again compared to the average in Florida.

Florida Median Income Levels

The median household income levels are always taken from data collected by the U.S. Census Bureau in the previous year, meaning that your income needs to be lower than the average of all households of your size for the previous year. Currently, the median household income levels in Florida are as follows-

  • $41,915 for a one person household
  • $51,760 for a two person household
  • $54,934 for three people
  • $65,260 for four people

If your household has more than four people in it, you’ll then need to add an extra $8,100 per additional member of the family to arrive at the median income level.

How to Take the Means Test

While this all may sound complicated, any experienced bankruptcy attorney can easily help guide you through the process so you can decide firstly if you qualify and, secondly, if bankruptcy is your best option. In fact, it’s basically impossible to move past this initial step without help, as the Means Test typically requires an in-depth computer analysis of your financial situation to determine whether you qualify for Chapter 7 bankruptcy.

However, even if you fail the Means Test, it’s not necessarily the end of the world, as it’s likely that you still may be able to file for Chapter 13 bankruptcy, whereby you’ll be required to pay off a portion of your debts over time, before filing have the remaining debts discharged when you’ve completed the terms of your settlement program.

Experienced Bankruptcy Attorney West Palm Beach

As one of the most experienced bankruptcy law firms in the Palm Beach area, the experienced attorneys at Kelley Kaplan & Eller can help guide you through your troubled times, ensuring you’re able to get the fresh start you so desperately need. Contact us today to get all of your questions about bankruptcy answered.

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