Eligibility for Chapter 7 and Chapter 13 Bankruptcy in Jacksonville, FL
If you are in a difficult financial position and creditors are beating down your doors, then you may be considering a personal bankruptcy filing. The decision to file for bankruptcy is never an easy one and you may have considerable anxiety concerning the filing. In many cases, individuals fail to file for bankruptcy until it is too late and they end up with wage garnishments and liens on their family home. In this article, the Jacksonville, FL bankruptcy attorneys at the Law Offices of Carol M. Galloway will discuss eligibility requirements for Chapter 7 and Chapter 13 bankruptcy.
Eligibility requirements for Chapter 7 bankruptcy
The main eligibility requirement for Chapter 7 bankruptcy is passing the means test. The means test evaluates your financial resources to determine whether or not you lack the means to pay off your existing debts. The first part of the means test compares your household income to the state median. Those who fall below the state median automatically pass the means test and are allowed to file for Chapter 7 bankruptcy. However, this is not the end of the analysis as to whether a Chapter 7 bankruptcy is the best option. Other factors such as assets, preferential payments to relatives and/or friends, and transfers of assets are considered.
If your household income is above the state median, you proceed to the second part of the means test. This phase of the means test analyzes your disposable income against your allowable expenses such as child care, mortgage payments, and utilities. If you have enough disposable income after analyzing your allowable expenses against your income, you may consider to file under Chapter 13 or Chapter 11.
Eligibility requirements for a Chapter 13 bankruptcy
Chapter 13 is referred to as the “wage earner’s plan.” Under a Chapter 13 bankruptcy, you must have a regular income to qualify. This chapter of bankruptcy allows you to produce a repayment plan to pay off your debts over a period of three to five years. You must have sufficient income to cover both your current living expenses and the repayment plan.
Instead of a cap on how much money you earn, in a Chapter 13 bankruptcy, there is a cap on how much money you owe. In a Chapter 13 bankruptcy, your secured debts (mortgage and auto loans) must not exceed $1,257,850. Your unsecured debts must not exceed $419,275. These numbers are adjusted for inflation and are subject to change.
How an attorney can help
A Jacksonville, FL bankruptcy attorney can help prepare your filing for Chapter 7 or Chapter 13 bankruptcy. We will assess all of your debts and liabilities alongside your current income and expenses to give you a basic understanding of which chapter of bankruptcy will most benefit your current situation. Regardless of whether or not you need to file under Chapter 7 or Chapter 13, we can help prepare your filing for the courts.
The Law Offices of Carol M. Galloway have helped hundreds of Jacksonville residents reset their finances and start over. Call our office today to schedule an appointment and learn more about how we can help.
