Tag: means test

Chapter 7 Bankruptcy, Means Test

How Do I Know If I Qualify for Chapter 7 Bankruptcy?

Posted on by Admin

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.

It’s important to remember that Chapter 7 bankruptcy isn’t just for low-income filers. You can earn significant monthly income and qualify for Chapter 7 bankruptcy if you have a large family or considerable expenses, like a high mortgage, car loan payments, taxes, and other reasonable expenses.

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.

Click here to read more.

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.

Consumer Bankruptcy

Questions to Ask Yourself Before Filing for Bankruptcy

Posted on by Admin

The decision to file for bankruptcy is never an easy one. It takes careful consideration and depends on a number of factors. Before making the decision to file for bankruptcy, ask yourself these questions.

Have All Other Options Been Exhausted?

Bankruptcy is not the only option when it comes to debt relief.  It often helps to first meet with a bankruptcy attorney to discuss your options. A budget is one tool a consumer can use to see what unnecessary expenses can be eliminated, freeing up additional funds to pay off debts. The consumer may also have luck in selling some of his or her assets to pay off various debts. Another option is for the consumer to reach out to his or her lenders to see if some type of payment plan or debt settlement can be reached on the debt.

The consumer may also consider credit counseling. This step should be taken even if the consumer is considering filing for bankruptcy since credit counseling, including a two-hour financial management course from a government-approved agency, must be completed at least 180 days before a bankruptcy discharge is issued.

Bankruptcy Law, Consumer Bankruptcy

How Much Debt Do You Have to Have to File Bankruptcy?

Posted on by Admin

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.

Bankruptcy Law, Consumer Bankruptcy

Understanding the Ins and Outs of Bankruptcy

Posted on by Admin

The thought of filing for bankruptcy can conjure up all kinds of emotions. For many, all they know of bankruptcy is what they have heard from others or seen on television advertisements. However, the following information can be helpful in terms of understanding the ins and outs of consumer bankruptcy.

Types of Consumer Bankruptcy.

If a consumer is considering filing for bankruptcy, he or she has two options available. These options are based on the specific chapters within the U.S. Bankruptcy Code. The first option is called Chapter 7 bankruptcy, often referred to as a liquidation bankruptcy. A Chapter 7 case tends to take only several months to complete and involve the filer working with the bankruptcy trustee to sell nonexempt assets and pay off qualifying debts. At the end of the case, the remaining consumer debts held by the filer are discharged. However, to qualify for filing for Chapter 7 bankruptcy, the filer needs to be below a certain income threshold per the bankruptcy court’s means test.

The other option is Chapter 13 bankruptcy, which takes three-to-five years to complete and involves the filer working with the bankruptcy trustee to complete a structured repayment plan on the consumer’s debts. Chapter 13 cases, since they take longer, do cost more in terms of legal fees.

Bankruptcy Law

How to Know which Type of Bankruptcy is Right for You

Posted on by Admin

Making the choice to file for bankruptcy is not an easy decision to make, but it is the first step towards a financial fresh start. However, choosing which type of bankruptcy to pursue can be a difficult decision to make.  

Typically, consumers choose between a Chapter 7 “liquidation” bankruptcy or a Chapter 13 “reorganization” bankruptcy. Both forms of bankruptcy have their positive attributes, as well as their negative ones, and it ultimately depends on the consumer’s financial situation and the goals he or she wants to achieve as to which type of consumer bankruptcy will be best for him or her.  

Bankruptcy Law

The Pros and Cons of Filing Chapter 7 Bankruptcy in 2020

Posted on by Admin

For someone struggling financially, a Chapter 7 bankruptcy case can offer him or her a fresh start and freedom from insurmountable debt. The year 2020 has pushed many consumers to the brink financially, and bankruptcy can offer the help a person needs to start the New Year debt-free.  

Pros of Filing Chapter 7  

As soon as a Chapter 7 bankruptcy case is filed, the consumer receives immediate protection from his or her creditors. This protection comes from the automatic stay that is issued by the court upon filing. The automatic stay puts a pause on all collection actions, including collection phone calls, legal proceedings to collect on a debt, wage garnishments, evictions, and foreclosures. The automatic stay also gives consumers a chance to breathe and work with the court and bankruptcy trustee.   

Bankruptcy Law

Steps for Filing Chapter 7 Bankruptcy in Florida

Posted on by Admin

If someone is considering filing for Chapter 7 bankruptcy, the path that person needs to take may not always be clear. While everyone’s situation differs in some respects, certain steps must be taken when it comes to proceeding with Chapter 7 bankruptcy.

Review Your Financial Situation

Before proceeding, it is always recommended that the filer sit down with an experienced bankruptcy attorney and go over what types of debt the person has, as well as what property would be protected by Florida’s bankruptcy exemptions.

Bankruptcy Law

Converting a Chapter 13 Bankruptcy to a Chapter 7

Posted on by Admin

On occasion, a Chapter 13 bankruptcy case may need to be converted to a Chapter 7 case. This transition may be on the request of the individual filer or the bankruptcy court. Many bankruptcy filers will decide to convert their Chapter 13 case into a Chapter 7 case in the event their financial situations have changed after the initial filing, or if the filer had originally chosen to pursue a Chapter 13 case to protect property that no longer needs protection.

The Conversion Process

Florida bankruptcy courts have specific guidelines that must be followed for converting a case from Chapter 13 to Chapter 7.  Unless the filer has already received a Chapter 7 bankruptcy discharge within the most recent eight years, he or she should be able to convert a Chapter 13 case into a Chapter 7 at any time.

Bankruptcy Law

Understanding the Bankruptcy Process: How to File & the Qualifications

Posted on by Admin

Filing for bankruptcy can be an emotional and sometimes stressful process. However, enlisting the help of an experienced bankruptcy attorney can make the process painless and worry-free.  Many clients have little understanding about what is involved when they file for bankruptcy.  Bankruptcy is a legal proceeding where a judge and bankruptcy trustee review the financial situation of individuals or businesses who are not able to pay their financial obligations and discharge qualifying debts that they are no longer able to pay.

The Purpose of Bankruptcy

Bankruptcy is meant to give an individual a fresh financial start, allowing that person to wipe the slate clean. It also serves as a way to give the filer some sense of relief through the protection of the automatic stay, which means creditors are prohibited from continuing collection actions against the filer. This allows the person time to regroup, protect valuable assets and work with the bankruptcy trustee to handle their debts.

Bankruptcy Law

How to Time Your Bankruptcy Filing

Posted on by Admin

Deciding when to file for bankruptcy can be a complicated one. Many times, it makes sense to delay filing for bankruptcy, while other times it makes sense to file right away.  In some situations, people are able to work out a plan to pay off their debt without having to file at all. If someone is struggling with making that determination, a bankruptcy attorney can help talk that person through his or her life situation and can help the individual decide when a good time would be for filing for bankruptcy.

Modifying a Mortgage

Bankruptcy is often used as a means of delaying foreclosure. In a Chapter 13 bankruptcy case, a bankruptcy filing will often allow the person to catch up on past-due payments while continuing to make current ones. However, sometimes a mortgage modification may be all the filer needs to hold onto his or her home. If the person files too quickly, he or she may have a harder time obtaining a modification of the mortgage. In fact, once a bankruptcy case has been filed, many lenders will not even talk to the borrower in terms of negotiations over the mortgage. If the borrower is anticipating a mortgage modification, it may be best to wait before filing for bankruptcy.

Income Qualifications

If someone is wanting to pursue a Chapter 7 bankruptcy case, he or she will need to pass the “means test” requirements set by the bankruptcy courts in Florida. If the filer’s income is too high, he or she will be prevented from pursuing a Chapter 7 liquidation bankruptcy case. Not passing the means test does not necessarily mean the person cannot pursue any type of bankruptcy. The filer may still qualify for a Chapter 13 bankruptcy plan, which requires him or her to repay a portion of the qualifying debts over a three to five-year period. The means test calculates the person’s income over a period of several months. Therefore, if the person’s income has dropped recently, he or she may still be able to qualify for Chapter 7 by holding off on filing for a few months.

Keeping Certain Property

Many times, the filer may have certain property that he or she would lose in a Chapter 7 bankruptcy case, such as an incoming tax refund. If the case is filed too soon, that tax refund may be liquidated and used to pay off certain debts. If the potential filer expects a large income tax refund, he or she may wish to hold off on filing for bankruptcy temporarily and use that money to pay for living expenses over the course of a few months before filing. However, make sure that the expenses being paid with this refund are for necessities and not luxury items. Otherwise the bankruptcy trustee may see the filer as trying to conceal or hide this income before filing. Also, this situation only matters for property that does not fall under an exemption, including the personal property exemption for Florida filers.

New Incoming Debts

If the filer anticipates some additional debts coming in the near future, it may also be wise to hold off on filing for bankruptcy. For most cases, a Chapter 7 bankruptcy case will only liquidate debts the filer has as of the date the petition was filed. Any debt that is incurred after the date of filing will stay with the filer after discharge. If the filer anticipates a major medical expense that will result in debt or necessary home improvement expense, it may be best to wait for filing until after that expense has been incurred, making it possible for that debt to be discharged.

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.

Related Resources:

https://www.nolo.com/legal-encyclopedia/file-bankruptcy-or-wait-29955.html