Tag Archives: means test

Can I file Bankruptcy if I am Unemployed?

Filing Bankruptcy while Unemployed | Attorney proudly serving Viera, Florida

If you have recently lost your job or you have been unemployed for a while, you are probably delinquent on your bills and debt collectors are harassing you. If you have considered filing for bankruptcy protection but you are concerned that you won’t qualify if you don’t have a job, it is important to understand that now may be the ideal time for you to file a case.

Bankruptcy Viera Florida, Bankruptcy Attorney serving Viera

Bankruptcy Attorney serving Viera, Florida

Every individual’s situation is unique, so it is essential to have an experienced attorney review your circumstances to determine the best strategy for you to take. While you are unemployed, you may be “judgment proof.” This means that you do not have any non-exempt assets or funds that a creditor can attack in collecting the debt from you. As a result, your creditors may not be taking any collection actions against you.

The Means Test | Bankruptcy Viera

However, while you do not have a job you will likely pass the means test and qualify for a Chapter 7 filing. The means test is a mathematical formula used by the bankruptcy court to ensure that you are not abusing the bankruptcy process in attempting to discharge your debt. The means test looks at your income from the prior six months to determine whether or not you have the ability to repay your creditors. If you have been unemployed for several months and show no income during that time, you may be eligible for a Chapter 7 filing when you otherwise would not qualify.

Your future income may be considered by the trustee even if you pass the means test. In other words, if the trustee thinks you are capable of paying your creditors, he or she has the ability to object to your discharge of debt. However, if you are not receiving any income, there is a very small likelihood that the trustee will file this type of objection.

If you are unemployed and read to obtain relief from your overwhelming debt, let us help. We can review your individual finances and determine whether or not a bankruptcy filing or other form of debt relief would benefit you.

Contact Faro & Crowder, PA to learn about your Bankruptcy Options in Viera, Florida

If you have questions about filing for bankruptcy protection, we have the answers. Call us today to schedule your initial consultation. Our office is located in Melbourne, but we proudly serve individuals, families and businesses across the State of Florida.  We also offer free initial consultations for foreclosure defense and defense against debt collection.

Clarifying the Chapter 7 Means Test

Amendments to the Bankruptcy Code were made in 2005 and one of the most significant additions to the law was the requirement of a debtor to pass the “means test” to be eligible to file a Chapter 7 bankruptcy. The means test is a calculation used by the bankruptcy courts to verify that a debtor is not abusing the bankruptcy system to discharge debts he/she can afford to pay.

Chapter 7 Means Test | Brevard County Bankruptcy Attorney

If you pass the means test, you qualify to file a Chapter 7 case. If you do not pass the test, the court assigns a “presumption of abuse” designation. This means that in order to continue with your Chapter 7 filing, you must provide evidence to overcome this designation. In other words, you must prove to the court that although you failed the means test, you are not abusing the system and you still qualify for Chapter 7 relief. The state median income figures can be viewed at the U.S. Trustee’s website:http://www.usdoj.gov/ust/eo/bapcpa/meanstesting.htm.

There are certain individuals that are not required to pass the means test. For example, the means test does not apply to disabled veterans who incurred the debt while on active duty or if your debts are primarily business debts. You automatically “pass” the means test if your income is below the median for your state. Many individuals seeking Chapter 7 relief qualify based solely on their income level.

If your income exceeds your state’s median income, you are allowed to deduct numerous expenses from your income. For example, you can deduct your living expenses. When all of the deductions have been made, the remaining amount is multiplied by sixty. If the amount that is remaining indicates that you have the ability to pay a significant portion of your unsecured debt, the court will presume your filing is an abuse of the system. An experienced bankruptcy attorney can assist you with claiming all of your available deductions in order to improve your chances of passing the means test and also help you determine if a Chapter 13 filing would be beneficial to you.

You have the ability to challenge a presumption of abuse designation. You have the burden of proof in establishing special circumstances that warrant the court allowing you to file a Chapter 7 case. If you have questions regarding filing a Chapter 7 bankruptcy or other ways we can help you, contact us for a free consultation.

Hazards of Filing Bankruptcy Without an Attorney

If you are struggling financially and considering filing for bankruptcy protection, you may be trying to decide if you really need an attorney. Many people assume they will save a significant amount of money if they do not use a lawyer to represent them in their bankruptcy case. This is referred to as filing “pro se” or without being represented by a lawyer. In many pro se cases, the debtor ends up losing significantly more money than if they had hired an attorney.

How does this happen? Bankruptcy law is confusing, plus court procedures and rules are strict. There is a reason lawyers spend years in school learning how to represent you! Although the Internet is full of websites claiming they can help you “do it yourself,” nothing can replace an educated human standing by your side and prepared to handle your unique circumstances. Many websites and books are not updated regularly or do not comply with your jurisdiction’s specific requirements. Plus, a local bankruptcy lawyer is known by the trustees and judges that will be supervising your case, which can help ensure that your case goes smoothly.

Below are a few general areas where pro se debtors typically make errors in their filing:

  • Means test. The means test is not really a “test.” It is a formula used by the bankruptcy court to decide whether or not you qualify to file a Chapter 7 case. The formula is complex and has numerous factors that must be considered. If you do not apply the means test correctly, it could result in you not being able to file a Chapter 7 or your case being converted to a Chapter 13 case, which means you will end up surrendering five years of disposable income. The debtor does not have a right to dismiss a case under Chapter 7. You can file a motion to dismiss a Chapter 7 case, but the motion will probably be denied on the trustee’s objection if you had non-exempt assets or were a good candidate for a Chapter 13. It is important to remember that once you have filed for bankruptcy relief you are no longer driving, the Court is, and the trustee is navigating. The destination is you being debt free, but the trustee is tasked with finding the route that gets your unsecured creditors paid as much as possible.  Chapter 13 is a tremendous tool to save property that has been pledged as security for debt, but if you have no such property and are forced into it, it can feel like indentured servitude. Good bankruptcy attorneys can determine whether you will qualify for Chapter 7, or would be better served by a Chapter 13, or would be better off not filing at all. It is important to have the information necessary to make that decision before you file and surrender control.
  • Deadlines. There are a wide variety of deadlines that must be met in your bankruptcy filing. The deadlines can vary between jurisdictions, but missing a deadline typically has serious consequences. It is common for a pro se debtor to miss strict deadlines that result in their case being dismissed.
  • Exemptions. Federal and state laws provide exemptions that protect your assets from being included in your bankruptcy estate. However, you must properly claim the exemptions in order to take advantage of them and to keep possession of the exempt assets. Failure to properly exempt an asset may result in it being seized by the trustee to pay your creditors. A knowledgeable bankruptcy lawyer will help ensure that all of the applicable exemptions are properly claimed in your case, which maximizes the amount of your assets that are kept safe.
  • Saving Money?       Many people think they will save money by not hiring an attorney. If you have non-exempt assets you will surrender them to the trustee. If you use non-exempt assets to pay a bankruptcy attorney, you are paying the lawyer with money you would have surrendered anyway.

If you are considering filing a personal bankruptcy case, contact us for a free consultationto learn how we can save you money and help you avoid the numerous obstacles that pro se debtors often encounter.

Contact a Brevard County Bankruptcy Attorney at Faro & Crowder, PA

If you are interested in learning more about how a bankruptcy filing will impact your debt, contact Faro Crowder, PA to schedule an appointment. We are located in Melbourne, Florida on Sarno Road and serve residents and businesses of the Space Coast and Brevard County.

Services Areas

We provide services throughout Central Florida including: Melbourne, Titusville, Palm Bay, Merritt Island, Cocoa, Cocoa Beach, Satellite Beach, West Melbourne, Cape Canaveral, Viera and Eau Gallie.

Get In Touch with Faro & Crowder, PA

Faro & Crowder, PA
Phone: 321-784-8158
1801 N. Sarno Road, Suite 01
Melbourne, FL 32935
Email: info@farolaw.com

The information on this blog or any blog is not intended as, and should not be taken as, legal advice.

Did The Means Test Effectively End Chapter 7 Bankruptcy?

Bankruptcy Worry

The means test is essentially just another form to file on an already-long list, and has very little, if any, impact on your decision to file Chapter 7 Bankruptcy.

The 2005 Bankruptcy reforms

While most “reform” legislation is usually a proposed solution to an existing problem, the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA, pronounced bap-see-pa) was more of a solution to a nonexistent problem. There was a perception among moneylenders, most often in the credit card sector, that consumers were using bankruptcy to avoid paying huge credit card bills that had been amassed solely on luxury items.

That may have been true in a few cases. But the vast majority of Chapter 7 debtors, especially in the last five or six years, are forced to file bankruptcy because of medical bills, job loss or some other emergency situation basically beyond their control.

The means test

BAPCPA introduced the means test as a way to push debtors into Chapter 13, where they would be required to, at least theoretically, repay more of their unsecured debt than was mandated in a Chapter 7.

To be eligible to file Chapter 7, your income must be lower than the median income in your home town, or your disposable income over five years must be less than 25% of your unsecured debt. The actual amount varies, but, generally speaking, if you are part of a family of four and you earn less than $65,000 per year, you are eligible to file.

Only your attorney can tell you for sure, as the government allows certain expenses, disallows certain expenses and sometimes, albeit rarely, makes exceptions in close cases.

Contact our office to find out if bankruptcy is appropriate for you, and which chapter is best for your family.

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