When it comes to filing Chapter 7 bankruptcy, the filer must meet a certain threshold when it comes to his or her debt-to-income ratio and qualify under the means test. However, there is no requirement that the filer carry a certain amount of debt to file Chapter 7 bankruptcy.
Federal bankruptcy law dictates the eligibility requirements to file Chapter 7 bankruptcy. The biggest of these requirements is the means test which compares the filer’s income to his or her debt. The means test is a two-step process. The first step requires looking at the consumer’s income as compared to Florida’s average income. If the filer’s income is higher than the median income for a household in Florida, the filer will need to then take the second part of the means test.
The second part of the means test requires the filer to submit documentation regarding his or her allowable expenses over the past six months. These expenses can include rent, groceries, medical costs, and clothing. After subtracting all these expenses, any money left is referred to as disposable income. If the individual does not have enough disposable income to pay for remaining debts, he or she qualifies under the means test.
Other bankruptcy requirements include the two courses all filers must complete. The first includes a credit counseling course that is required to be completed before the petition is filed, and the second course is required to be finalized before the court grants the filer’s discharge.
If the filer’s income is too high and he or she does not qualify to file for Chapter 7 bankruptcy, Chapter 13 bankruptcy may also be an option. While this form of bankruptcy takes longer than Chapter 7 bankruptcy and requires the filer to follow a payment plan under the supervision of the bankruptcy trustee, it does allow the consumer to eliminate the great majority of his or her unsecured debts through a bankruptcy discharge.
A bankruptcy case has no minimum or maximum requirement when it comes to unsecured debt for Chapter 7 bankruptcy. So long as the filer qualifies through the means test, how much debt he or she carries should not affect that person’s ability to successfully file for Chapter 7.
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If you have questions on this topic or are in financial crisis and considering filing for bankruptcy, contact an experienced Miami bankruptcy attorney who can advise you of all of your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade Garcia McMaken has been helping people from all walks of life build a better tomorrow. Our attorneys’ help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade Garcia McMaken website at www.miamibankruptcy.com.
