Florida Bankruptcy Means Test and Income Limit 2024

Chapter 7 Means Test Explanation

The means test is used to see if your income is within the income threshold to file for Chapter 7 bankruptcy in Florida. The bankruptcy forms do some number crunching to figure out your average monthly income, and then they go and annualize that to get your average annual income.

If you're in Florida, they will look at your entire household income, even if your spouse is not filing with you. Keep in mind, if you are legally separated, things might be a bit different, so you may want to chat with an attorney.

Next, the means test compares your income to the income thresholds for the Chapter 7 means test in Florida. They get those figures from the Census Bureau. 

If you want to dive deeper into how they calculate your average monthly income for the means test you can review the Average Monthly Income for the Florida Bankruptcy Means Test.

If your income fluctuates, you might want to check out this calculator. It's designed to give you an estimate of your average monthly income for the means test. You can find it right here: Average Income Calculator.

Let's dive into how the bankruptcy means test is calculated in Florida for cases filed in 2022.

Florida Chapter 7 Bankruptcy Income Limit

When it comes to Chapter 7 Bankruptcy Florida income limits, these figures are specifically for bankruptcy cases filed on or after April 1, 2024.  These numbers change every six months or so. These income levels are calculated based on the size of your household. If you have more than nine people in your household, you'll need to add $9,900 for each additional family member. Here's the table below:

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What Is Considered Income?

Not all income is included in this test. For instance, certain disability and social security income are exempt from the bankruptcy means test. There are a couple more types of income that are also not included in the Florida means test, like payments for war crime victims and payments related to a national emergency, such as the ongoing COVID-19 situation.

Now, let's take a closer look at the types of income that are included in the Florida bankruptcy means test. The test covers any regular payments made by entities other than the debtor to cover household expenses. It's a pretty broad definition, so let's break it down into a few categories:

1. Salaried income: That's your regular paycheck.
2. Spousal income: If you're in a joint case or not legally separated, your spouse's income counts too.
3. Hourly and overtime income: working over the normal threshold
4. 1099 Income: If you're working for gig economy platforms like Uber or Lyft, that income may be included.
5. Net Rental Income: If you're making money from renting out a property, it may be considered.
6. Florida government income: Income from the Florida government may be included as well.
7. Child support and Alimony: Yep, those payments may be included as well.
8. Dividend, Interest, and Royalties: Money coming from investments and intellectual property could be on the table.
9. Pension and Retirement Income: Retirement income and pension may be considered.
10. Net business income: If you're running a business, the money you make may be taken into account.
11. Annuity payments: Regular payments from an annuity may be considered too.
12. Unemployment compensation: If you're receiving unemployment benefits, they may be part of the equation.
13. Worker's Compensation Benefits: If you've been injured on the job, any compensation you receive may be included.

What Is Considered In Household Size?

How exactly is the household size determined? Your roommate might not be considered a part of your household size, but typically, your children who you claim as dependents on your taxes may be included.

Now, things can get a bit tricky if you have children who are away at college or if you're engaged but not yet married. Different bankruptcy jurisdictions in Florida might have their own rules on who can be counted as part of your household. Generally, it usually goes by the saying “heads on beds” and sometimes the attorney may look at who is filed within your taxes, so be sure to seek council.

Timeframe of Filing Another Bankruptcy

If you filed for bankruptcy in the past and are looking to file again, be sure that the appropriate amount of time has passed. Before you file another chapter of bankruptcy, you may have to wait a few years. Check out the timeframe below:

Chapter Filed Earlier, Chapter to be Filed, Time Restriction

• Chapter 13, Chapter 13, 2 years between filing
• Chapter 7, Chapter 13, 4 years between filing
• Chapter 13, Chapter 7, 6 years between filing
• Chapter 7, Chapter 7, 8 years between filing 

Florida Above Median Bankruptcy Means Test

If it seems like your income is higher than the average household income in Florida. There's still a chance you could qualify for bankruptcy based on two additional means test forms. Let me break it down for you:

The first form is called the "Statement of Exemption from Presumption of Abuse Under §707(b)(2)". This means that you can provide some evidence to show that even though your income is high, you still need bankruptcy relief.

The second form is the "Chapter 7 Means Test Calculation". You can deduct certain monthly expenses from your current monthly income to figure out your disposable income. These expenses include both national and Florida-specific costs.

Disposable income is the money you have left after paying all your expenses. And if your disposable income falls below a certain amount, you might still be eligible for Chapter 7 bankruptcy.

To make things easier, there's a calculator below that uses both forms to help you estimate and determine if you may qualify for Chapter 7 bankruptcy in Florida:

Allowable deductible expenses

Here is the breakdown of the certain expenses you may be able to deduct.

• First up, we've got mandatory employment deductions like union dues, retirement plans, and uniforms. Those may be considered.
• Next, health and disability insurance premiums.
• Don't forget about income taxes.
• If you're shelling out for child care.
• Term life insurance premiums
• Secured debt payments for your car and home are also on the list
• Alimony and child support payments
• And last but not least, charitable contributions, but there's a catch. They're limited to a percentage of your income.

You might be able to deduct other expenses too, depending on your special circumstances. However, keep in mind that these deductions have limits based on the number of people in your household. To find out the maximum amounts allowed for these expenses, you can check out the current national standards.

• Need to stock up on housekeeping supplies
• Clothing expenses
• Food expenses
• Personal care services and products
• Housing and utility expenses
• Transportation expenses
• Out-of-pocket healthcare expenses

If you have any other questions, it's always a good idea to reach out to a local bankruptcy attorney in Florida for a free evaluation.

What Happens If You Fail the Bankruptcy Means Test?

If you don't pass the Chapter 7 bankruptcy means test, there are other options for you, so don’t worry! Other alternatives include Chapter 13 bankruptcy, debt settlement, debt management, or debt payoff planning.

Chapter 13 Bankruptcy

A Chapter 13 bankruptcy in Florida is like a wage earner's plan. You make a payment plan to pay back a portion of your unsecured debts, so essentially, you will be set on a repayment plan where you could pay none, some, or all of the debt back. The payment plan is determined by your non-exempt equity and disposable income. The good news is that you may keep your assets, and there's no need to qualify as long as you're under the debt limits. It only stays on your credit report for 7 years instead of 10 years with a Chapter 7. The payment plan can last either 36 or 60 months, but if you're in a 100% Chapter 13, your plan might be shorter.

However, with Chapter 13, failing the means test means you do not have enough disposable income to make a payment at the end of each month to the bankruptcy trustee. Because of this, the court cannot grant you a Chapter 13 bankruptcy, which may require sizable monthly payments.

Now, why would someone choose Chapter 13 over Chapter 7 bankruptcy? Well, some individuals go for Chapter 13 if they have more equity than what's allowed under the Florida bankruptcy exemption. It's a way to protect their assets while still dealing with their debts. Another reason is it can help with a foreclosure. 

Debt Settlement

Debt settlement is when you or a company negotiate with your creditors to reduce the amount of debt you owe or forgive a portion of what you originally owed. For example, if you had $50,000 in debt, debt settlement might bring that down to a more manageable $25,000.

Debt settlement usually involves a payment plan that can stretch anywhere from 12 to 60 months and can be cheaper than Chapter 13 bankruptcy.

When choosing a debt settlement company, you have to be careful. Some companies charge around 25% or more of your enrolled debt. So, make sure you do your research before diving in. You can check out the Consumer Finance Protection Bureau for the latest debt settlement program information.

Keep in mind that many debt settlement firms are national, so you don't necessarily have to find one that's local to Florida.

Cons of Debt Settlement

There are some potential negatives of this option, namely that you tend to have to miss a few payments for your creditors to be willing to negotiate. Not only does this put you at risk of being sued by the creditor, but it also impacts your credit score for up to seven years.

Additionally, there is no legal protection so if a creditor does not agree to a negotiated payment plan, they may sue you. If a creditor sues you then that may go on your credit report. 

There are also potential taxes on the forgiven debt. Whatever debt was forgiven in the settlement may be taxable and you have to report the canceled debt on your tax return for the year it was canceled. Generally, you may have to report any taxable amount of canceled debt as income. The creditor may send you a 1099-C form you would have to fill out.

Debt Management

Debt management, or credit counseling, is when a company steps in to help you with your debt by negotiating a lower interest rate. Let's say you're stuck with a 22% interest rate on your debt. A debt management company can work to bring that rate down to a more manageable 9%. Most debt management companies are non-profits and help get interest down on credit card debt, but when it comes to unsecured personal loans, they might be unable to help. You'll typically be put on a payment plan when you sign up for a debt management program. This plan can last anywhere from 36 to 60 months. 

The pro of this program is that it may allow you to pay into the principal rather than the increasing interest. So, if you have credit cards with high interest rates and want a less aggressive option, this may be something to look into. 

The downside to this option is that you still have to pay off everything you owe, so it may be a more expensive option. The good news is that it won’t hurt your credit as much as some of the other options may. However, the accounts included in the program will close which may take a small hit to your credit.

Many debt management firms are national, so you don't have to stress about finding a local one if you live in Florida.

Summary

When it comes to filing for bankruptcy in Florida, Chapter 7 is often the most affordable debt relief option out there.

Here are the basics of how the Chapter 7 bankruptcy means test and income limit work in Florida:

1. The first part of the test looks at how your household income stacks up against the Florida income limit. Not all types of income are included in this calculation.
2. If your household income exceeds the limit, you may still qualify for Chapter 7 bankruptcy in Florida based on your expenses and deductions.
3. But let's say you don't pass the bankruptcy means test. There are still other options available to you, like Chapter 13 bankruptcy, debt settlement, and debt management. It's all about finding the right fit for your unique situation.

I hope this article has shed some light on the bankruptcy means test and income limit in Florida. If you want to get a better idea of whether you qualify for Chapter 7, go ahead and use the Florida bankruptcy means test calculator below. It'll give you a rough estimate of where you stand.