• Florida law allows for a generous homestead exemption in bankruptcy.florida beachs image by Photoeyes from Fotolia.com
  
  If you have more money going out than coming in, you may be deep in debt. It is not uncommon for debtors to take a drastic step to stop the draining of money from their accounts. A way to stop the creditors from coming after you until you have no money left is to file for bankruptcy in the state of Florida.
  
  

Florida Median Incomes

• A debtor must pass a means test before he can file for Chapter 7 bankruptcy. The debtor must compare his family's income to the median family income of the state of Florida. If the debtor’s family income is less than the state median family income, the debtor may file for Chapter 7 bankruptcy. Florida’s median family incomes as of 2010 were: single-earner, $41,079; two-person family, $52,073; three-person family, $58,366; four-person family, $68,763. Add $7,500 for each family member in excess of four.
  
  

Means Test

• If the debtor’s family income is above the state median family income, her disposable income will be the deciding factor in whether or not she can file for Chapter 7. The debtor should subtract her monthly expenses from her monthly income to determine her monthly disposable income. The debtor can file for Chapter 7 bankruptcy: if her monthly disposable income is less than $100; or if her monthly income is more than $100, but that would not be enough to pay at least 25 percent of her debts over the next five years.
  
  The debtor fails the means test when her monthly disposable income of more than $100 would be enough to pay 25 percent of her debts over the next five years. The debtor’s options would be to file for Chapter 13 bankruptcy or not file for bankruptcy at all.
  
  

Exempt Property

• When the debtor files his Chapter 7 bankruptcy petition, a trustee is appointed to oversee the case. The trustee conducts a meeting of creditors where the debtor attests to the truthfulness of his petition and supporting materials. The trustee takes the debtor’s property and sells property that is not exempt from being sold. The trustee uses the proceeds of the sale to pay off a portion of the debtor’s creditors. Once this has been done in a satisfactory manner, the debtor receives a discharge of unsecured debts.
  
  The state of Florida allows its debtors to keep certain property that would be essential for the debtor to continue life as usual. Florida’s list of exemptions include: homestead of unlimited value, not to exceed one-half acre in a municipality or 160 acres elsewhere; prepaid hurricane savings accounts; prepaid medical savings account deposits; prepaid college education trust deposits; motor vehicle up to $1,000; prescribed health aids; federal income tax credits or refunds; pre-need funeral contract deposits; head of household, up to $500 per week in earnings; pensions; public benefits; alimony and child support; insurances.
  
  After a debtor files a bankruptcy petition, an automatic stay goes into place. The bankruptcy court requires that all of the debtor’s creditors end their efforts to collect on debts at this time.