Chapter 7 bankruptcy is the most common type of bankruptcy filing. Under Chapter 7, your non-exempt assets and personal property are sold and the proceeds are used to pay creditors. A Chapter 7 filing may result in the loss of all non-exempt property; however, it can also achieve a complete discharge of all eligible debts and no further obligation to pay discharged debts in the future. There are certain debts that are non-dischargeable under Chapter 7, such as mortgages, liens (such as car loans), child support, alimony or debts incurred through fraud.

You must pass the Means Test to qualify for Chapter 7 bankruptcy. The Means Test evaluates a debtor’s income, comparing it to the median Florida income for a household of the same size, to determine whether they need Chapter 7 relief. If you pass the Means Test, you are allowed to file for Chapter 7 bankruptcy; if not, you can file for Chapter 13 bankruptcy.

You must pass the Means Test to qualify for Chapter 7 bankruptcy. The Means Test is a form that establishes your income and compares it to the Florida median income for households of a similar size. If only one spouse is filing Bankruptcy, the means test is based on both spouses’ previous six months’ gross income. The month in which the case is filed is not included. For example, if you file in December, the preceding months of June through November will be calculated by the means test.

If your income for the most recent six months preceding the bankruptcy filing is below the median income, you pass the Means Test and are eligible for Chapter 7 bankruptcy. However, there are situations in which you still might choose to file for Chapter 13 bankruptcy. For example, a Chapter 13 might be better for you if you want to keep more assets than allowed by Florida exemptions; you want to strip a second lien on a homestead or; you are in arrears on your car payment or home payment and you want to retain the car or home.