3 things parents should know when considering bankruptcy

On Behalf of | Apr 23, 2024 | Bankruptcy |

Filing for bankruptcy is one way that some parents have been able to regain control of their financial future so that their children can enjoy greater stability.

There are many considerations that you’ll need to think about if you’re considering filing for bankruptcy partially for the benefit of your family. For example, these three issues might have a major impact on whether you decide to file or not.

Means test to determine bankruptcy type

One of the first things that has to be decided is whether you’ll file a Chapter 7 or a Chapter 13 case. This isn’t as easy as just picking one. If you’re going to file a Chapter 7 bankruptcy, you’ll have to pass a means test. This test takes your family size, income and expenses into account. It compares your income against Florida’s median income. If your income is lower, you can file a Chapter 7. If you don’t pass the means test, you won’t be able to file Chapter 7 and need to focus on Chapter 13.

Exemptions in Florida

Florida has some unique exemptions for individuals who are filing for bankruptcy under Chapter 7. One of the most important for many filers is the homestead exemption. The equity exemption allows you to keep that equity as long as you’ve owned the home for 1,215 days before you file. That’s roughly three years.

Florida also offers a wage exemption of up to $750 per week for the head of household. Other family members have a maximum exemption of up to 30 times the federal minimum wage or up to 75% of their wages.

Exclusions from protection

There are certain debts that can’t be discharged in bankruptcy. One of these is child support payments. You’ll still have to pay these obligations, but it’s sometimes possible to have a child support order modified if there has been a significant change in income.

Filing for bankruptcy requires a thoughtful approach. Ensuring that you understand the responsibilities you have in regards to the process, and what will happen as you move forward, is important so you can better ensure that you’re doing what’s best for you and your family.