Debt issues can develop because of a car crash, a diagnosis with cancer, the loss of a job or even a failed business start-up. Those without the resources to address their mounting debts may eventually turn to bankruptcy for a discharge of unsecured personal debts. Most people filing personal bankruptcy will choose between Chapter 7 and Chapter 13 bankruptcy. Specific limitations on Chapter 7 filings may prevent some people from filing.
Those with higher levels of income may not qualify for Chapter 7 bankruptcy and will instead need to complete a wage-earner’s plan in a Chapter 13 bankruptcy filing. This plan involves multiple years of structured payments to your creditors through the courts before you can discharge the balance of what you owe.
Chapter 7 bankruptcy leads to a much quicker discharge of your unsecured debts, but you will have to pass the Florida means test to qualify. The means test compares your income over the last six months to the state medium, and only those who have passed the test can file for Chapter 7 bankruptcy.
What are the income limits for Chapter 7 filings in Florida?
Every state has a different average cost of living and median household income. How much income you can earn while still qualifying for Chapter 7 bankruptcy depends on your household size and income at the time of filing.
If you are the only household member, you can qualify with up to $55,681 in income. With two people in the family, you can earn $69,884. Those with three members in their family can qualify with an income of up to $75,057, while those with four people in their household can earn up to $89,206. Those with bigger families can add another $9,000 for each additional family member over four.
Adjusting your income is an important step
You don’t just calculate your annual income based on the last six months of your pay history. You also have the right to make adjustments to your income for certain necessary expenses. You can qualify when your overall income is higher than you might expect.
Getting the right help when adjusting your income for the means test and evaluating different bankruptcy options can maximize the positive impact of your personal bankruptcy filing.