If you are a Florida professional or business owner who is experiencing cash flow problems, you could consider filing for bankruptcy, especially if you are having challenges making ends meet. You may worry about the possible stigma as well as your family’s future, but it is crucial to obtain as much information as possible to make an informed decision.

What are your options?

If you wish to file personal bankruptcy, you have two options – Chapter 7 and Chapter 13. Chapter 7 will dismiss most of your debts while Chapter 13 will allow you to reorganize your debts by setting up payment plans for a set period. Although Chapter 7 may seem like the optimal choice because it can afford you a clean slate in just a few short months, you might not be able to do so.

Qualifying for Chapter 7 bankruptcy

In 2005, the bankruptcy laws changed to clamp down on presumed abuses. The Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) aims to prevent those from filing Chapter 7 who would otherwise be able to pay their debts. The BAPCPA requires you to pass a means test to determine if you have money left over at the end of the month before the court approves your Chapter 7 bankruptcy. If you fail the means test, you must choose between filing Chapter 13 or dropping your case.

Improve the likelihood of a favorable outcome

Review your expenses to determine which ones, if any, are allowable under Chapter 7. While certain items are forbidden, many are acceptable, including:

• Education expenses for children
• Health care
• Expenses for the care of an elderly family member
• Home energy costs

The court may ask you to present proof of special circumstances that suggest you are eligible for Chapter 7, such as a change in your marital status, recent deployment in the armed forces, job loss or income reduction.

Understand all the laws

You may be tempted to file for bankruptcy by yourself. However, you may not understand how Florida bankruptcy law applies to your circumstances. Understanding your legal rights may increase your opportunity to obtain a favorable result.