People often wonder what is involved in this so-called “means test.” The first thing you need to do to complete the means test is to determine your “current monthly income.” This is determined by finding the average of your income for the past 6 months, multiplied by 12, and then compared to the median income for families of your size in the state in which you reside. You must gather proof of any source of income from the last 6 months. On top of your pay stubs, this includes any child support, alimony, bonuses, and dividends you have received. If you are married your spouse’s income also matters even if they are not filing for bankruptcy. This is because your household is receiving support from your spouse and that money must to be available for creditors. If you run your own business you must determine your net income for the last 6 months with your gross income and business expenses.

Once you have then determined your current monthly income, that’s when you compare it to your state’s “median family income.” The median family income for your state is determined by the US Census Bureau by looking at the income level in every state where half the families make more and half the families make less. The median family income is also determined by the size of your family – since larger families are expected to have higher income numbers. Thus, every additional individual in the family increases your median family income. For example, if you have a family of three people you are considered to have a higher median family income than if you were a family of one.

In the end, the means test determines whether you are above or below a certain point – financially speaking. If you are above that certain level, then you will have to file for Chapter 13 and repay your debts over a period of 3 to 5 years (not the best news if what you’re looking for is a quick and painless elimination of debts). But if you are below that certain income level, then you will be able to proceed with your Chapter 7 filing.

The means test can be confusing to the common filer, but an experienced bankruptcy attorney knows all about it and can be very helpful in helping you to complete the means test. It is one of the first steps the lawyers here at Clark and Washington take in filing your bankruptcy.

A reaffirmation agreement is a formal contract made between you and the creditor that states you will pay all or a portion of the money you owe in spite of the Chapter 7 bankruptcy filing. As long as the reaffirmation agreement is followed, you can keep your property or your home after the bankruptcy and the creditor gives their promise to not repossess or take back the property as long as your payments are made per the agreement.

It is important to consult with an attorney before entering into an agreement such as this to ensure that your rights are protected and that it is in your best interest. If you are not represented by an attorney, then you must have a bankruptcy judge approve your reaffirmation agreement. The judge will ask questions to make sure that the reaffirmation agreement does not impose an excessive, unnecessary burden on you or your dependents. If it is determined that it is impossible for you to pay off the debt on your mortgage, a reaffirmation agreement may not work for you.

The experienced bankruptcy attorneys here at Clark & Washington understand the laws governing reaffirmation agreements in Florida. Give us a call today to schedule a free consultation if you are interested in filing Chapter 7 but would like to keep your home in the long run.

If you are extremely cash strapped, you might be tempted to look for a "cheaper" way to file for bankruptcy – either by trying to fill out the bankruptcy petition paperwork yourself or by hiring a non-attorney "petition preparer" to assist you.

At Clarkand Washington, we would strongly urge you to reconsider any decision to proceed with bankruptcy without the help of a licensed Florida attorney.

Bankruptcy paperwork is complicated and mistakes in preparing and filing your petition and subsequent pleadings can haunt you for years to come.  More importantly, you may not receive all of the benefits that bankruptcy can and should provide you.

Here are just a few of the complicated issues that arise in every bankruptcy case:

• means test analysis – the Bankruptcy Code requires every debtor to prepare and submit an detailed analysis of his/her family income during the six month period prior to filing.   The purpose of this analysis is to determine whether you have enough "disposable income" to pay creditors back in a Chapter 13, or if you qualify for Chapter 7.  The means test analysis requires you to use IRS tables of approved monthly expenses and median income tables for various family sizes that is prepared by the United States Trustee's office
• amendments to petition – frequently you will face objections or requests for additional information in your Chapter 7 or Chapter 13 case.  These requests will come in the form of official looking pleadings that will be served on you.  If you are proceeding without counsel, you may not know how to respond to these pleadings or where to submit your response.
• bankruptcy procedure requirements – in addition to the official pleadings, every individual bankruptcy debtor must submit additional paperwork, including credit counseling certificates, financial management course certificates, pay stubs (with Social Security numbers blacked out) and tax returns.  Would you know where and how to submit these documents if you are proceeding without counsel?

It is unfortunate that preparing and filing a bankruptcy has become so complicated.   However, Clark and Washington has a standing policy whereby we will not turn away any deserving debtor because of a lack of cash on hand.  In most cases, we will be able to file your Chapter 7 or Chapter 13 case with only the filing fee paid (the filing fee for Chapter 7 is $299 and the filing fee for Chapter 13 is $274).  Thus, for less than $300 to start, you gain the benefit of an experienced Tampa bankruptcy law firm.

So, if you are tempted to file bankruptcy on your own or with a non-attorney, please take a minute and call our office first.

Michael Cone, the former president of a road contracting company, has been sentenced to a fifteen year prison term for bankruptcy fraud.  His wife, Joanne, claims that she had minimal knowledge of her husband's business and that her signature on bankruptcy paperwork did not reflect an intent to defraud the bankruptcy court.

Whether or not you believe Mrs. Cone, let her experience serve as an important lesson.  If you sign your name to a bankruptcy petition you are asserting under oath and under penalty of fraud that the information contained therein is true.  As Mrs. Cone has discovered, it is much more difficult to later claim that you had no knowledge of your spouse's business.

What should you do if both you and your spouse need to file bankruptcy, but you have some misgivings about the truthfulness of your spouse's disclosures?

First, you should seek your own counsel.  Attorneys are not permitted to represent clients with conflicting interests, even if those clients are married.  Most consumer bankruptcy lawyers will speak with you at no charge.  At Clark and Washington, we are happy to schedule an office appointment at no charge.  If you are concerned that your spouse is lying on his/her petition, you may file your own petition that reflects your financial situation as you know it to be.

Read the Tribune story carefully.  Apparently, Mr. Cone had the opportunity to accept full responsibility and spare his wife a prison sentence.  He apparently believed in his innocence and lost at trial.  Now his wife is facing five years.

Situations and relationships change.   If you are sitting in a bankruptcy lawyers office, you need to do what is best for you.

When is the right time to file for Chapter 7?  Clark and Washington's Jamie Allen explain why Chapter 7 can provide the most benefit to you when are not expecting your financial situation to get much worse.