The “means test” is a combined work of fact and fiction. It is not based on actual current income and actual expenses. Instead it is based on your income of the past six months and IRS national averages for most of your expenses such as utilities, food, rent, etc. Some expenses use actual numbers such as mortgage payments and car payments but for the most part, it’s a congressional work of art that purports to determine if you can afford to pay back your creditors through a Chapter 13 bankruptcy.
The means test was adopted because the credit community was able to convince congress that there was rampant abuse in Chapter 7 bankruptcy filings. This “perceived” abuse resulted in every bankruptcy Chapter 7 case having to “pass” the means test in order to file a Chapter 7 bankruptcy. That would be great if the means test used actual expenses and actual income – but it doesn’t. If you don’t “pass” the means test, then bankruptcy law assumes that an "assumption of abuse" exists. Whether an assumption of abuse exists will determine whether you can file a Fort Lauderdale Chapter 7 bankruptcy. With that said, most people will pass the means test and have the option of filing a Chapter 7 bankruptcy in Fort Lauderdale.
If you don’t pass the means test and qualify for a Chapter 7 bankruptcy, the means test is still very important because if you have monthly income left over according to the test’s fictional expenses – that may determine the minimum monthly amount that you have to pay creditors in a Chapter 13 bankruptcy. Either way, it’s important that you get an affordable Pembroke Pines bankruptcy attorney that knows how to ace the means test!
The Chapter 7 means test applies to those primarily have “consumer debts” such as credit cards, car debt, or mortgages. Debtors whose debts are primarily business debts do not have to take the means test and may file Chapter 7 bankruptcy regardless of their income and expenses.
Why the Means Test is Part Fact and Part FictionThe Chapter 7 "means test" is a two-part test. The first part of the Chapter 7 bankruptcy means test compares your family's income and allowable expenses to the official median income for households in Florida. The median income number adjusts according to the size of your household. If your income is less than the median family income, then you pass with flying colors! If your income is more than the Florida median income for your family size, it doesn't mean that you won't qualify for a Chapter 7 Bankruptcy. It just means that you have to move on to the second step of the Chapter 7 means test to figure out your disposable income.
In the second step, you will deduct allowable expenses (based on IRS national standards) to determine your disposable income. Your disposable income is presumed to be available to pay general unsecured creditors. Then you multiply that number by 60 to determine how much disposable income you'll have over the next five years.
Determining "Means Test" Disposable IncomeTo arrive at your "disposable income," you may deduct the following expense categories from your CMI:
The Fictional Expenses on the Means TestYou are allowed to deduct the greater of either the IRS local housing allowance or the total of actual mortgage payments plus allowed home maintenance expenses, such as utilities. For cars, you can deduct either secured debt payments or the IRS car allowance, whichever is greater.
Fort Lauderdale Chapter 7 Means Test SummaryBy now you may be scratching your head and asking yourself "what did they just say?" The means test can be complicated and hard for most people to understand. That's why you need an experienced Broward County bankruptcy lawyer that knows how to ace the means test. Bankruptcy laws are in place to help prevent abuse of the system. In reality, you do not need to fear the means test.
The Bankruptcy Law Firm of Orfelia Mayor is a debt relief agency in Broward County that loves what they do! We help people file for bankruptcy under the bankruptcy code. Make our day by letting us help you stop wage garnishment, stop foreclosure sales, stop car repos and just get you back into loving life! Your creditors have lawyers on their side – shouldn’t you have a lawyer too?
Contact us today for a no-charge, no-obligation bankruptcy consultation throughout Broward and Palm Beach County. We happily service clients in: Broward County including Oakland Park, Cooper City, Coral Springs, Miramar, Dania Beach, Davie, Deerfield Beach, Fort Lauderdale, Hallandale Beach, Hollywood, Lauderdale Lakes, Lauderhill, Lighthouse Point, Margate, Weston, North Lauderdale, Coconut Creek, Parkland, Pembroke Pines, Plantation, Pompano Beach, Sunrise, Tamarac, West Park, Weston. In Palm Beach, we serve clients in Boca Raton, Lake Worth, West Palm Beach, Lantana, Boynton Beach, and all cities in Palm Beach County.
Ask About Our Affordable Payment Plans and Zero-Money-Down Chapter 7 Bankruptcy.Just a quick note about the main thing on everyone’s minds when they are thinking about bankruptcy. You’re looking for a cheap bankruptcy attorney near you but you should be looking for an experienced and affordable bankruptcy attorney near you instead. We make bankruptcy affordable in Broward County.
When Your Debt Relief Can't Wait - We Can Wait For Our Attorney Fees!
While the majority of our clients prefer to make regular payments towards a bankruptcy before they file so they can get discounted attorney fees, some clients need to file right away to stop a wage garnishment, car repo or foreclosure sale. Those clients prefer to take advantage of our $0-down-payment bankruptcy option.
We can tell you more about it during your free bankruptcy consultation but to sum it up briefly, it works like this: Once you sign a retainer agreement, you only pay the costs of filing your case (approximately $485) and all of your attorney fees are paid after we file your case. This option does not get a discount on attorney fees but it does allow you to file an emergency bankruptcy petition so we can stop whatever debt collector that is threatening to take your property or garnish your paycheck. Of course, you can also take advantage of our zero-down-bankruptcy option if you do not have a bankruptcy emergency. It’s up to you. I do promise that we have a payment option that fits your budget and your situation. Make an appointment at our Cooper City bankruptcy office today! No matter where you live in Broward County, we are a bankruptcy attorney near you!