Florida Bankruptcy Means Test and Income Limit 2025

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 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. If you are legally separated, things differ slightly, 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 learn 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.

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 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." To calculate your disposable income, you can deduct certain monthly expenses from your current monthly 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, we have 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, there's a catch for charitable contributions. They're limited to a percentage of your income.

You can deduct other expenses, too, depending on your special circumstances. However, remember 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, contacting a local bankruptcy attorney in Florida for a free evaluation is always a good idea.

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 you will be set on a repayment plan where you can pay back none, some, or all of the debt. Your non-exempt equity and disposable income determine the payment plan. 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 stays on your credit report for seven years instead of 10 years with a Chapter 7. The payment plan can last 36 or 60 months, but your plan might be shorter if you're in 100% Chapter 13.

However, with Chapter 13, failing the means test means you do not have enough disposable income to pay the bankruptcy trustee at the end of each month. 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? 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 dealing with their debts. Another reason is that it can help with foreclosures. 

Debt Settlement

Debt settlement is when you or a company negotiate with your creditors to reduce the 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 last 12 to 60 months and is 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 information on debt settlement programs.

Remember that many debt settlement firms are national, so you don't necessarily have to find one that is local to Florida.

Cons of Debt Settlement

This option has some potential negatives, 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, 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. 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 that 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 in the program will close, which may take a minor hit on 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.

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. Other options are still 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 Florida's bankruptcy means test and income limit. 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.