While unemployment remains high due to the Covid 19 pandemic, relief programs and emergency moratoriums on evictions are expiring. This leaves many people feeling like they have nowhere to turn as their payments become due and their resources run out. It’s helpful to know that Chapter 7 bankruptcy is a way to discharge all of your debt, giving you a fresh start financially. The best way to find out if you are eligible for is to call an experienced Chapter 7 bankruptcy attorney to discuss your options.
Chapter 7 and Florida’s Homestead Exemption
In order to be eligible for Chapter 7 bankruptcy in Florida, you must either be a permanent resident or property owner in the state. Chapter 7 bankruptcy is “means tested” using a complicated formula to determine eligibility. The great news for Floridians is that Florida’s homestead law allows most homeowners an exemption for the entire value of their primary residence. The exemption is unlimited if you’ve lived in the residence for more than 40 months before filing. In 2020, the exemption is $160,000 for a single person and $320,000 for a jointly owned homestead that’s been owned for less than 40 months before filing. It’s important to note that a debtor’s investment in a homestead for ten years after filing may be challenged by the bankruptcy as transferring money with the intent to defraud creditors. If you’re considering filing for bankruptcy, it’s important to discuss whether the homestead exemption will apply to your situation with an experienced Chapter 7 bankruptcy attorney in Miami.
Means Test For Florida Chapter 7 Bankruptcy
The means test is a complicated formula that applies to debtors whose income is higher than the state’s median income, ($50,641 for a single person, $67,717 for a family of 3 in 2020.) The means test takes into consideration the number of people living in your household, and fixed expenses such as:
- Rent/mortgage payments;
- Vehicle ownership/leasing expenses
- Spousal and child support;
- Telephone services and
- Out of pocket medical expenses.
The only way to know whether you’re likely to be eligible is to speak to an experienced Chapter 7 bankruptcy attorney in Miami that can apply your situation to the law.
Pros and Cons of Chapter 7 Bankruptcy
If you qualify, Chapter 7 is a very powerful debt relief. Filing stops all collection activities including salary garnishments, collection letters and phone calls and temporarily stays foreclosures, evictions and repossessions. Permanent relief under Chapter 7 wipes out most debt including credit cards, medical debt and personal loans. You can keep most of your personal belongings and emerge with a clean slate and a chance to rebuild your credit. The major disadvantage is the hit your credit rating takes when you file, but if you’re thinking of bankruptcy it’s likely your score was low to begin with. It’s important to remember that child support and alimony can never be discharged in bankruptcy, and tax and student loan debt can be very difficult to eliminate. The best way to assess whether filing for bankruptcy is right for you is to speak to a Chapter 7 bankruptcy attorney in Miami or learn more from this website.