This becomes very relevant because your ability to file a chapter 7 is based upon your income and expenses. That threshold varies due to your household size. As of October 2023, the Florida chart for the median income to qualify for a Chapter 7 is as follows:
One person household $60,429
Two-person household $74,131
Three-person household: $83,396
Four-person household: $100,476
Five-person household: $110,376
Six-person household: $120,276
Those numbers typically get adjusted twice annually for inflation. A dependent can be anyone age 18 or younger residing in your house at least 50% of the time. College age children are still considered dependents, as long as, they are between the ages of 18-24 and are full-time students.
If you have a partner, disabled or elderly family member who resides in your household they may qualify as dependents if they don’t work and you are providing more than half of their financial support. Two people cannot claim the same individual as a dependent on their tax returns. For example, you have your child and grandchildren living with you.
You are the person really providing more than one half of the financial support for your grandchild, but your child wanted to declare them as a dependent to get a tax refund. If you are counting someone in your household as a dependent, the tax returns should be consistent and reflect that.
Typically, if someone is divorced and they have 2 children 50/50 custody we list one child as the dependent not two. There are situations where it can be tricky so it’s best to consult with an attorney to make sure you are claiming the correct number of dependents.
All of your creditors get listed in the bankruptcy petition so as soon as the bankruptcy petition is filed, the court will mail your creditors the 341 meeting of creditor’s notice. The notice has your case number is located on the notice so they can log on and review all pleadings that get filed in the case.
If you have an active state court case where a lawsuit is pending against a creditor we file what is called a Suggestion of Bankruptcy in the underlying case. That alerts the Judge and all the parties in the State Court case that there is an automatic stay in effect, the litigation must stop because of the active bankruptcy. If you have any co-debtors they also receive a notice from the court.
People often ask if their employer gets notified of the bankruptcy. Your employer will not get notice of your bankruptcy filing. Similarly, people also ask if their landlord on a residential lease gets notified. You do have to list any leases/contracts so they do ordinarily receive notice.
This usually does not present an issue as long as, you are making your rent payments on time to your landlord. If you are involved in a domestic violence type of situation, we can get the court to seal the address from your file for your protection.
Your bankruptcy will typically not show up in a general google search so don’t be deterred from filing for bankruptcy because you think you people will find out. The case is filed in Federal Court and requires Pacer access to view case information.
Situations come up frequently where a potential client is on the deed to their parent’s or another relative’s house to make it easier when that person passes away for it to already be in the debtor’s name.
The client often is not living in the property, has not paid a dollar towards the property, the property may be paid off, or the property has equity. The client has their own debt and now wants to file for bankruptcy. Unfortunately, this presents a problem. If you are not living on the property, it is not protected by the homestead exemption.
If you are renting, certainly you can move back in with your parents once your lease expires to get the homestead exemption on the property when you file for bankruptcy. You will have a problem if you already own a house. You can only declare homestead and be living on property. In that case if there is equity in the property (which is not exempt), you would need to pay that back to the trustee.
Let’s say there is 100K in equity in the property, you would need to pay the trustee 100K. If you had 100K in liquid cash, you probably wouldn’t be considering bankruptcy.
That would make a Chapter 7 not feasible. You other option is to file a Chapter 13 and pay your debts over 60 months and keep the property. There are significant benefits of doing a Chapter 13. You stop incurring interest on your debts. You might be able to pay it off early. You would need enough disposable income to pay the trustee each month.
Some potential clients cannot afford to do a Chapter 13, so they suggest removing their name off the deed or putting the property into someone else’s name. That too will not work since all property transfers from two years from the date we file the petition would need to be disclosed. Usually transferring property before considering filing for bankruptcy results in worse issues and is not recommended.
If you find yourself in this situation, feel free to contact my office to discuss your options.
There are certain income requirements to file a Chapter 7. That amount typically adjusts for inflation twice per year. That amount varies based on your household size and by state.
In the State of Florida the amounts are as follows:
One person household: $60,429
Two-person household: $74,131
Three-person household: $83,396
Four-person household: $100,476
Five-person household: $110,376
Six-person household: $120,276
Dependents in your household include children under the age of 18. If custody is split, we usually factor in how much time the child spends at your residence and how many children there are. If custody is split 50/50 and there are two children, we would list a two-person household. Children under the age of 24 that are in school full-time can also be considered dependents or any disabled children. If there are elderly parents living in the household, they can be considered in the household size or any other relatives. However, if any person is included in the household size, we need to include their income and expenses as well. Social security does not count towards the income amount.
If you are still over that amount, there is still a potential you could qualify for a chapter 7 if you “pass” the long form of the means test. The means test is required for all those debtors who are over the “median”. The test determines your eligibility for a Chapter 7 or the amount of your plan payment in a Chapter 13. It uses some of your actual expenses and some expenses are determined by the IRS guidelines based on your household size and county where you reside. It can get a bit complicated, so it is good to consult with a bankruptcy attorney to guide you through the process.
There are occasions that arise either before or during bankruptcy cases where a married couple gets divorced and wants to sell their martial home.
If you are residing in the marital home at the time you file for bankruptcy you can declare it as homestead property, and it is exempt from the trustee taking it. If you decide to divorce and sell your marital home prior to filing bankruptcy, then the proceeds from the sale of the home are not exempt.
You would either have to spend those funds on reasonable living expenses prior to filing your bankruptcy case or invest those sale proceeds into another home. If you are getting divorced in the middle of your Chapter 13 case and want to sell your marital home, you will need to file a motion and have a court order permitting the sale and have a determination made on how the sale proceeds will be spent.
You can typically re-invest the money into a new homestead, as long as, that occurs within a year. You would need to open a new bank account that is clearly titled “Homestead proceeds” and not co-mingle that money with other funds in order to protect those funds.
If you plan to move out of the State of Florida, then the home sale proceeds would not be exempt since you are relocating outside of the state. These situations can be tricky and its best to seek the advice of an attorney prior to making any decisions to ensure those funds are protected.
