Chapter 7  Bankruptcy

Chapter 7 bankruptcy is what most people think of when they think of “bankruptcy.” It is used to obtain a fresh start when a debtor has a large amount of unsecured debt, such as credit cards, medical bills, signature loans, or has secured property (home, auto) for which the debtor cannot afford to make the payments or just wants to give up.

Chapter 7 Means Test

Chapter 7 is a liquidation of your net estate in exchange for the discharge of your dis-chargeable debts. A lot of rules apply. There is the means test to establish if for your situation your non-exempt income is too high to qualify for liquidation.

There is also an asset test. The Trustee is entitled to your net (non-exempt) assets. There is little provision in a Chapter 7 for protection from liens. Chapter 7 is in many cases not for individuals with potential windfalls, inheritance, assets which are not clearly exempt, liens which have arranges with which you plan to catch up, liens that you want to cram-down, or for people who are in control of other people’s money. The good part about the chapter 7 is that there is not a payment plan and the discharge usually comes between four and six months after filing. To get a better idea on how this applies to you, please consult an attorney.

Benefits of Chapter 7 Bankruptcy:

  • Stopping creditor harassment
  • Stopping wage garnishments
  • Inexpensive Costs
  • Stop most creditor related lawsuits
  • Eliminate repossession and foreclosure debts
  • A Way to baseline your credit and stop negative reporting
  • Typically shorter time frame to discharge
  • Unsecured creditors generally do not get paid back
  • Generally keep your exempt assets, including those with secured loans if you are current

What is Chapter 7 Bankruptcy?

Chapter 7 bankruptcies can be a powerful tool for discharging debt for many people who are unable to manage their debt. About 65% of all U.S. consumer bankruptcy filings are Chapter 7 cases. If you want to legally request that most of your remaining debts be discharged, then a Chapter 7 bankruptcy petition may be a good option for you. In the case of a Chapter 7 bankruptcy petition, the bankruptcy trustee may sell any property you own that is not exempt from seizure to pay your debts and disburse the proceeds to your creditors. Pursuant to bankruptcy law and Florida state law, you may keep certain (exempt) property considered “off-limits” to creditors.  Contact us for a free initial consultation to get answers to your questions about our state property exemptions in Chapter 7 bankruptcy.

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