Chapter 7

Chapter 7 bankruptcy, also known as liquidation bankruptcy, is the most common form of bankruptcy in Central Florida. Chapter 7 bankruptcy is a legal process under the United States Bankruptcy Code that allows individuals or businesses to discharge certain types of debt by liquidating non-exempt assets to repay creditors.

As the least expensive and fastest route to debt relief, Chapter 7 can give you a fresh start by releasing you from all dischargeable debts. Not everyone will qualify and not all debts are dischargeable. Exemptions usually allow the debtor to keep most of their personal property, even after bankruptcy is concluded.

Am I eligible to file Chapter 7 Bankruptcy?

Eligibility for Chapter 7 bankruptcy is primarily determined by the means test and other factors. Here’s an overview of the process to determine if you qualify.

1. Means Test: The means test compares your income to the median income in your state for a household of your size. If your income falls below the median, you typically qualify for Chapter 7 bankruptcy. If your income exceeds the median, further analysis of your expenses and disposable income is conducted to determine eligibility. If you have significant disposable income, you may be required to file under Chapter 13 instead.
2. Previous Bankruptcy Discharges: If you have received a Chapter 7 discharge within the past eight years or a Chapter 13 discharge within the past six years, you may be ineligible for Chapter 7 bankruptcy. However, there are exceptions, and eligibility may depend on the specifics of your previous bankruptcy case.
3. Credit Counseling: Before filing for bankruptcy, you are required to undergo credit counseling from an approved agency within 180 days prior to filing. Additionally, completion of a financial management course is typically required before receiving a discharge.
4. Fraudulent Behavior: If you have engaged in fraudulent behavior, such as concealing assets or providing false information on your bankruptcy petition, you may be ineligible for Chapter 7 bankruptcy or face other legal consequences.

Once it’s determined I’m eligible to file Chapter 7 Bankruptcy, how will the process work?

Here’s a walkthrough of the Chapter 7 bankruptcy process if you qualify.

1. Credit Counseling: Before filing for Chapter 7 bankruptcy, debtors are required to undergo credit counseling from an approved agency.
2. Filing the Petition: You initiate the Chapter 7 bankruptcy process by filing a petition with the bankruptcy court in your jurisdiction. This petition includes detailed information about your financial situation, assets, liabilities, income, and expenses.
3. Automatic Stay: Upon filing the petition, an automatic stay goes into effect, which halts most collection actions by creditors, including lawsuits, wage garnishments, foreclosure proceedings, and creditor harassment.
4. Appointment of Trustee: The court appoints a trustee to oversee your case. The trustee’s primary responsibility is to review your assets, determine which assets are exempt from liquidation under state or federal law, and sell non-exempt assets to repay your creditors.
5. Liquidation of Assets: Non-exempt assets that are not protected by exemptions can be sold by the trustee to generate funds for distribution to creditors. Exempt assets, such as certain types of property, retirement accounts, and personal belongings, are typically retained by the debtor.
6. Debt Discharge: Once the trustee liquidates the non-exempt assets and distributes the proceeds to creditors, remaining eligible debts are discharged by the court. This means you are no longer legally obligated to repay those debts, and creditors are prohibited from attempting to collect them. Additionally, completion of a financial management course is typically required before receiving a discharge.

It’s essential to consult with a qualified Brevard County bankruptcy attorney to evaluate your financial situation and determine your eligibility for Chapter 7 bankruptcy. At your free consultation, John Russo will review your financial situation, discuss what property and assets you should expect to keep, and explain what you should expect to turn over to creditors. Central Florida Bankruptcy Attorney John Russo can help you understand the requirements, navigate the bankruptcy process, and explore other debt relief options if Chapter 7 is not feasible for you. 

Disclaimer: The law firm contacted through this site is a debt relief agency and helps people and businesses of Florida file for bankruptcy under the U.S. Bankruptcy Code.