BANKRUPTCY

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Bankruptcy Through History: A Law of Mercy and Renewal

Bankruptcy has endured for centuries as a compassionate mechanism to restore balance amid financial hardship. Far from immoral, debt forgiveness is woven into the fabric of law, religion, and global society as an essential act of mercy. Ancient civilizations — from the Hebrews and Greeks to the Romans — grasped that perpetual debt could shatter families and societies. The Bible echoes this wisdom in the “Year of Jubilee” (Leviticus 25), where every 50 years brought economic reset through debt cancellation and property restoration, and the “Year of Release” (Deuteronomy 15), mandating seven-year debt forgiveness to proclaim liberty and renewal.

America's founders enshrined these principles in our foundational document. Article I, Section 8 of the U.S. Constitution empowers Congress “to establish uniform laws on the subject of Bankruptcies throughout the United States,” framing it not as failure, but as a cornerstone of economic liberty and human dignity.  Today, this tradition thrives worldwide. Post-2008, nations like Iceland and Ireland forgave vast consumer debts to spur recovery; in 2025, developing countries continue benefiting from the Heavily Indebted Poor Countries (HIPC) Initiative, which has delivered billions in relief to 37 nations, mostly in Africa, fostering stability. 

Even the U.S. government routinely extends bankruptcy grace to giant businesses: trillions in bank and business bailouts during the COVID crisis (2020-2024), recent 2025 support amid two bank failures, and proposals for at least $10 billion in farmer aid. Prominent figures like Donald Trump have leveraged Chapter 11 bankruptcy six times for his enterprises, emerging stronger each time.  Through eras and economies, debt relief signals resilience, not shame. Bankruptcy upholds this legacy — a constitutional, moral lifeline offering honest individuals and families dignity, stability, and a true fresh start.       

  Understanding Bankruptcy Options We Work With

Bankruptcy is a federal legal process that helps individuals and families get relief from unmanageable debt. There are several different “chapters,” depending on your financial situation and goals. There are a number of different bankruptcy options, but we only deal with chapter 7 and chapter 13 bankruptcies.

Chapter 7 – Liquidation
A court-appointed trustee reviews your assets and determines what property, if any, can be sold to pay creditors. Most people who qualify keep all or most of their property and receive a discharge of unsecured debts such as credit cards and medical bills.

To qualify for Chapter 7, your household income must pass the Means Test, a calculation overseen by the U.S. Department of Justice. This test compares your household income to the median family income in Florida for a family of your size. The limits change frequently, and eligibility depends on the amount of money coming into your household and your allowable living expenses.

The Means Test compares your household income to the average income for a Florida family of the same size.
“Household size” means everyone who lives in your home and shares household income or expenses — not just the person filing.
These limits are updated twice a year by the U.S. Department of Justice.

Current Florida Median Income Limits (as of 2025):

• 1 person (you only): $65,801
• 2 people (you + spouse or dependent): $81,109
• 3 people (you + 2 others): $93,983
• 4 people (you + 3 others): $107,712
• Add $11,100 for each additional household member

If your total household income (from all sources before taxes) is below these limits, you will likely qualify for Chapter 7 bankruptcy.

If it’s higher, you may still qualify for Chapter 13 or another form of relief after deducting allowable living expenses.

If your income exceeds the threshold, you may still qualify for Chapter 13 or another form of relief. You may only receive a Chapter 7 discharge once every eight years.

Chapter 13 – Repayment Plan
You keep your property and make monthly payments to a trustee for three to five years under a court-approved plan. Chapter 13 can stop foreclosures and help you catch up on missed mortgage or car payments while reorganizing your debts.

Required Bankruptcy Courses

Before and after filing, federal law requires two short online classes to help you manage your finances and complete your case successfully.

1. Credit Counseling (Before Filing)
This course must be completed before your bankruptcy petition is filed. It usually takes about an hour and can be done online or by phone through a U.S. Trustee–approved provider. You’ll receive a certificate that must be filed with your case.

2. Debtor Education / Financial Management (After Filing)
This second course must be taken after your case is filed but before discharge. It covers budgeting and rebuilding credit. The court will not grant your discharge until this certificate is filed.

Most approved providers charge less than $25 per class, and you can take both from home on your own schedule - see downloadable document below.

If you need help finding an approved provider, contact our office—we can point you to a few that are reliable and inexpensive.

DISCHARGE

The goal of bankruptcy is a discharge—a court order that eliminates your legal obligation to repay most debts. Some debts cannot be discharged, such as:

• Child support or alimony
• Most student loans
• Most taxes
• Court fines or criminal restitution
• Debts from personal injury caused by DUI or drug impairment

If you obtained a debt through fraud or failed to list it in your case, that debt may not be discharged.

Engagement and Fee Policy

Consultations and document reviews are provided to help determine your eligibility and best options under bankruptcy law.

You are not considered a client of Brevard Consumer Law Center until a signed fee agreement has been returned and payment of the agreed fee has been received.