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What’s Chapter 7 Bankruptcy

Exemptions Available In Florida

Life After Chapter 7 [My Bankruptcy Story]

Just because chapter 7 is known as liquidation bankruptcy does not mean that all of your assets must be sold off. Many exemptions are available for those filing for chapter 7 in Florida, which means that many of your assets will be protected from sale during bankruptcy proceedings. Some of your exemptions may include:

Depending on your situation, you may even fall into a category known as a no-asset case, in which you are deemed to own no assets after available exemptions are applied.

To consult with an experienced bankruptcy lawyer today, call

Filing For Chapter 7 Bankruptcy

If youve given all youve got to those alternatives and youre still drowning in debt, know this: You arent a bad person if you have to file for bankruptcy. Good people get in tough situations. And youll get through this.

Heres how to file for Chapter 7 bankruptcy:

  • Gather and organize your documents. Youll probably need a list of your debts, income and assets.
  • Finish the bankruptcy process.
  • What Happens After The Meeting Of Creditors

    After the meeting of creditors, the trustee may contact the debtor regarding the collection or existence of nonexempt property and the court may issue orders to the debtor. These orders may require the debtor to turn certain property over to the trustee or provide the trustee with certain information.

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    Get Help From A Financial Coach

    You can also get money advice from a trained financial coach. Not from your neighbor. Not from your parent. From a highly trained coach. Theyll talk with you about alternatives to bankruptcy and create a plan based on your personal situation. A financial coach will give you encouragement and remind you of what we said earlier: It really will be okay. It might be hard, but it will be okay.

    Who Can File Chapter 7

    What Happens to my Property during a Chapter 7 Bankruptcy Case ...

    An individuals eligibility to file Chapter 7 is determined by the means test instituted with the 2005 amendments to the bankruptcy code.

    Some high earners may not qualify for Chapter 7 if their debts are primarily consumer debts. With the help of experienced bankruptcy lawyers, most people who want to file Chapter 7 can do so.

    Chapter 7 is generally the simplest and quickest form of bankruptcy and is available to individuals, married couples, corporations and partnerships.

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    Who Can File Chapter 7 Bankruptcy

    Not everyone qualifies for Chapter 7 bankruptcy, but Chapter 7 bankruptcy works well for people without much income or valuable property. Higher-income earners and people who own a lot of property are often better suited for Chapter 13 bankruptcy.

    That’s not to say higher-income people won’t qualifyit happens more often than you might think. But you’ll need to have quite a few family members or a lot of allowable expenses for it to work. Keep reading to learn why.

    How Long Does A Chapter 7 Case Last

    A chapter 7 case begins with the filing of the case and ends with the closing of the case by the court.

    If the debtor has no nonexempt money or property for the trustee to collect, the case will most likely be closed shortly after the debtor receives his discharge, which is usually about four months after the case is filed. If the debtor has nonexempt money or property for the trustee to collect, the length of the case will depend on how long it takes the trustee to collect the assets and perform his other duties in the case.

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    What Do Creditors With Mortgages Against The Debtors Property Do In A Chapter 7 Case

    A creditor must prove the validity of the mortgage and obtain a court order, however, before repossessing or foreclosing of any property and the debtor should not turn any property over to a creditor until a court order has been obtained.

    If the value of the mortgaged property exceeds the amount secured by the mortgage, the creditor might not be allowed to repossess the property. The debtor is permitted to retain certain property even if there is a valid mortgage against it,and the debtor may redeem certain mortgaged property from the creditor by paying less than the amount secured by the mortgage.

    Do I Meet The Qualifications For Chapter 7 Bankruptcy

    “What’s the difference between a Chapter 7 and a Chapter 13 bankruptcy?”

    If you do, chances are youll eventually walk away with a new lease on financial life.

    The American Bankruptcy Institute reported that 94.3% of Chapter 7 filings between Oct. 1, 2018 and Sept. 30, 2019 were successfully discharged, meaning filers were no longer required to pay the debt.

    Here are the standard requirements to qualify for Chapter 7 bankruptcy:

    • You must pass a means test, which looks at your income, assets and expenses.
    • You cannot have filed a Chapter 7 or Chapter 13 bankruptcy petition that was dismissed in the previous 180 days.
    • You cannot have completed a Chapter 7 in the past eight years, or a Chapter 13 in the previous six years.

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    Chapter 7 Bankruptcy Rules For After The Case Is Filed

    Once your Chapter 7 bankruptcy case is filed, the bankruptcy laws immediately provide you with protection from your creditors in the form of the automatic stay. The Bankruptcy Code bans any collection activity against the debtor and the debtorâs property as soon as a bankruptcy petition is filed. Thatâs why a wage garnishment has to stop right away after a bankruptcy case is filed. But, thatâs not the only thing that happens. There are additional rules for the person filing Chapter 7 bankruptcy, their creditors, and the bankruptcy trustee handling the case.

    How Do Bankruptcy Exemptions Work

    Most of the Chapter 7 bankruptcy exemptions have a limit. This means that anyone filing bankruptcy can protect certain types of property up to a certain amount. For example, say your car is worth $3,500, and the exemption for motor vehicles in your area is up to $6,000. In this case, you’d be allowed to keep your vehicle because its value is lower than the exemption amount.

    What if your vehicle was worth $9,000? In this case, your trustee could sell the vehicle for $9,000. They would then give you the $6,000 that’s protected by an exemption and divide the remaining $3,000 amongst your creditors.

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    How Is A Debtor Notified That His Discharge Has Been Granted

    Most courts send a form called Discharge of Debtor to the debtor and to all creditors.

    This form is a copy of the court order releasing the debtor from his dischargeable debts and it usually serves as notice that the debtors discharge has been granted. It is usually mailed about four months after the case is filed, unless the trustee or a creditor has filed an objection to the discharge of the debtor, in which case a hearing must be held so that the court can rule on the objection.

    If the debtors discharge is not granted, the court must inform the debtor of the reasons for not granting it.

    Chapter 7 Bankruptcy Discharge

    Debt, Bankruptcy, And How to Move Forward

    The successful conclusion of a Chapter 7 bankruptcy involves a discharge, what the Administrative Office of the U.S. Courts describes as a release individual debtors from personal liability for most debts and prevents the creditors owed those debts from taking any collection actions against the debtor.

    Remember, however, the limits of the sorts of debts that can be discharged in a Chapter 7 bankruptcy. Filers who have retained an attorney to see them through the process will have an opportunity to review what, if any, obligations remain after a successful discharge.

    As noted earlier, all but a tiny percentage of attorney-supported Chapter 7 filings are discharged. However, the court takes an aggressively dim view of Chapter 7 applicants who are found to be pulling a fast one.

    Chapter 7 filings can be rejected for a variety of reasons, among them: debts for money/property acquired by false pretenses debts for fraud debts for malicious injury when contested by the injured creditor or debtor, without satisfactory explanation, makes a material misstatement or fails to provide documents/information related to an audit of the debtors case.

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    The Most Common Chapter 7 Exemptions

    Though every state handles Chapter 7 bankruptcy exemptions a little differently, some common types of property are usually protected. For example, your car, home, and clothes are usually protected. But collectibles, investments, and vacation homes are less likely to be exempt. Chapter 7 bankruptcy exemptions vary by state and federal laws, so the following is only a rough guideline. For more specific information, research the laws in your area or consult with a bankruptcy attorney.

    Chapter 7 Bankruptcy Vs Chapter 13 Bankruptcy

    Chapter 7 Chapter 13
    • Liquidates all nonexempt assets and uses the proceeds to pay creditors
    • Sets up a plan to repay all or part of your debts while keeping your home, vehicle and other personal property
    • For low-income debtors with little or no assets
    • For debtors with a stable monthly income and the ability to make payments under the proposed plan
    • No upper limit on debt
    • Cannot have more than $465,275 of unsecured debt or $1,395,875 of secured debt
    • Receive discharge of remaining eligible debts, typically within four to six months
    • Receive discharge of eligible remaining debts after completion of repayment plan
    • May not provide a way for the debtor to avoid foreclosure or repossession
    • Allows the debtor to catch up on missed payments and avoid foreclosure or repossession
    • Remains on your credit report for up to 10 years
    • Remains on your credit report for up to seven years

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    How Long Does Chapter 7 Bankruptcy Take

    Most people can file their bankruptcy forms within one week if theyâre organized. The 341 meeting with the trustee who oversees your case takes place about one to two months after you file.

    If all goes well, two to three months after your meeting with your trustee, youâll get a letter in the mail that your debt is officially discharged. This means that that Chapter 7 bankruptcy from beginning to the discharge of your debts takes about 3-5 months.

    What Is Chapter 7 And How Does It Work

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    Chapter 7 is that part of the federal bankruptcy laws permitting a person to discharge certain debts by filing a case in the bankruptcy court, turning all of his or her nonexempt property over to a trustee, and obeying the orders and rules of the court. A person who files under Chapter 7 is called a debtor.

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    What Is A Means Test

    A means test is a formula that determines whether you have the means to pay your debts or dont have the means and are eligible to file for Chapter 7 bankruptcy.

    You determine your current monthly income by averaging your monthly income over the six months prior to filing for bankruptcy. If it less than the median monthly income of your state, you qualify for Chapter 7.

    Median income varies quite a bit. According to a 2019 U.S. Census Bureau report, Maryland has the highest annual median income at $83,242. West Virginia had the lowest at $44,097.

    If your median income exceeds the state average, you can still qualify for Chapter 7 bankruptcy. Thats because you are allowed to deduct certain expenses from your income total.

    If your monthly income still exceeds the state average, you will have to file for Chapter 13 bankruptcy.

    In a bit of relatively good news for people wanting to file Chapter 7 bankruptcies, the money they get from coronavirus CARES Act passed in March 2020 does not have to be included in determining eligibility.

    Example Of A Chapter 7 Bankruptcy

    The popular American eatery Benniganâs was closed when its parent company, Metromedia Restaurant Group, filed for chapter 7 in July 2008. This closed 150 corporate locations with 138 franchise-owned restaurants remaining open. The closures were quick with most locations shuttering overnight and liquidations conducted before the end of 2008.

    Atalaya Capital Management bought the assets in the bankruptcy. It later sold the assets in 2015 to Legendary Restaurant Brands, LLC, a private company that has worked to revive the brand and restore it to its original glory as a family-loved restaurant.

    Note: Private capital firms or competitors often buy the assets of a company during bankruptcy. The proceeds of the sale are used to pay the creditors and potentially even the shareholders, but the new owners will have no further obligation to the former shareholders after the liquidation process.

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    But What About The Bill Collectors

    One of the major attractions of bankruptcy is that it stops most collection attempts. Creditors and collectors of most types of debt have to immediately stop contacting a debtor by phone, mail, in person or any other method once a petition is filed. They also have to stop garnishing wages, and cant file lawsuits seeking payment.

    But creditors can request that this stay on collections be lifted, and sometimes it is. Also, only creditors named by the debtor in the bankruptcy filing will be warned to stop their contacts.

    Chapter 7 Vs Chapter 11 Bankruptcy

    Chapter 7 bankruptcy Attorney in Chattanooga, TN

    There are several types of bankruptcy filings. It’s important to choose the best option for you and for your future financial situation. Consider the key differences between Chapter 7 and Chapter 11 bankruptcy.

    Chapter 7 Bankruptcy
    Known as “liquidation” or “straight” bankruptcy Known as “reorganization” or “rehabilitation” bankruptcy
    More often used by individuals to help repay debts More often used by businesses to help repay debts while continuing operations
    Process generally takes four to six months Process can last years

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    After Filing: Attend Personal Financial Management Counseling

    Before receiving a bankruptcy discharge, you must attend a course about financial management with an agency approved by the U.S. Trustee’s office. This is different from the credit counseling course you attended before filing.

    You will receive a certificate to file with the bankruptcy court upon completion. This requirement is necessary for the fulfillment of bankruptcy.

    What Is A Chapter 7 Debt Discharge

    By FindLaw Staff | Reviewed by Bridget Molitor, J.D. | Last updated June 30, 2021

    Under Chapters 7, 11, 12, and 13 of the U.S. Bankruptcy Code, some or all of your existing debt can be discharged. A âdischarge” means you are not personally liable for the money and do not need to pay it back. The creditor you owe, such as a hospital or credit card company, cannot call you or take collection actions against you once the debt is permanently discharged.

    Note: Most people will file a Chapter 7 bankruptcy to remove credit card debt and seek debt relief. If you are new to Chapter 7 bankruptcy, you can read more about the process and what to expect. For those filing Chapter 13 bankruptcy, you will need to pay back most of your debt in a repayment plan. Some debts may have a bankruptcy discharge but you might have to keep personal liability for other debts.

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    Chapter 7 Bankruptcy: What It Is And How To File

    Many or all of the products featured here are from our partners who compensate us. This may influence which products we write about and where and how the product appears on a page. However, this does not influence our evaluations. Our opinions are our own. Here is a list ofour partnersandhere’s how we make money.

    Chapter 7 bankruptcy can wipe out many forms of overwhelming debt under the protection of a federal court. You may have to give up some assets, like an expensive car or jewelry, but the vast majority of filers do not. Chapter 7 bankruptcy is the fastest and most common form of bankruptcy.

    Chapter 7 bankruptcy erases most unsecured debts, that is, debts without collateral, like medical bills, credit card debt and personal loans. However, some forms of debt, such as back taxes, court judgments, alimony and child support, and student loans generally arent eligible. Chapter 7 bankruptcy will leave a serious mark on your credit reports for 10 years. During this time youll likely find it harder to get credit. Even so, youll probably see your credit scores start to recover in the months after you file.

    Read on to learn about how you can qualify for Chapter 7 bankruptcy, how to file, whether this debt relief option is right for you, and how to rebuild after bankruptcy.

    Personal Items And Household Goods

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    In addition to big items like your home and your vehicle, most of your everyday belongings are also protected by exemptions. This is because lawmakers decided that no matter your debt issues, you should be able to keep these items.

    The rules vary by state, but, for the most part, your clothes, furniture, and appliances should be safe to keep. But more expensive items may not be exempt. For example, things like designer clothes, expensive jewelry or handbags, and ornate furniture might be evaluated by your trustee. There may be exemptions to protect these items, but itââ¬â¢s important to know that theyââ¬â¢re not always protected.

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