Every individual is not eligible to file a Chapter 7 bankruptcy. To be eligible to file a Chapter 7 bankruptcy you must meet several criteria. Your income cannot be over a certain amount, and if it is, you must pass a qualifying test that referred to as the “means test”. The test compares your family income to the median income of a similar family in Florida. The means test is used to figure out whether you have enough disposable income to repay at least a portion of your unsecured debts. Depending on the results of the means test, further calculations may be necessary to determine if you are eligible to file a Chapter 7 bankruptcy or if a Chapter 13 bankruptcy options.
A Chapter 7 bankruptcy provides the chance to receive protection against creditor harassment and all collection efforts, including telephone calls, letters, home foreclosure, collection lawsuits, auto repossession, and garnishment. This protection is given to you by an automatic stay that is created immediately upon filing a Chapter 7 bankruptcy petition.
When you file a Chapter 7 bankruptcy, almost all of your property becomes property of the bankruptcy. A Chapter 7 bankruptcy trustee is appointed and has the authority to sell your property not protected by the allowable exemptions or non-exempt property to pay creditors. Exemptions allow you to keep a certain amount of property. All or most of your property may be claimed exempt under Florida’s exemption law. How much property you can keep in a Chapter 7 bankruptcy depends on the value of the property and if it can be claimed exempt. Florida homestead law allows you to keep your house. Florida law also allows exemptions for 401Ks, social security benefits, supplemental security income, pension plans, workers compensation, and prepaid college tuition accounts.
When you file for Chapter 7 bankruptcy, you must decide how to handle your secured debts. You must choose to reaffirm, redeem or surrender the property secured by the debt.
If you want to keep the property secured by the debt you may need to negotiate a reaffirmation agreement with the creditor. Reaffirming a debt means that you will continue making the payments on the debt after your bankruptcy case is over. Both the creditor’s lien on the collateral and your personal liability for the debt survive bankruptcy, just as if you never filed for bankruptcy.
When you redeem property in Chapter 7 bankruptcy, you essentially buy it back from the creditor in one lump sum.
If an individual debtor doesn’t want to keep the property that is secured by the debt, then the debtor can “surrender” it. When property is surrendered, it is given it back to the creditor and then the individual debtor is cleared of all liability for the secured debt and lien.
You receive a Chapter 7 discharge in a matter of months after filing the petition and attending one court appearance at 341 Creditor’s Meeting.
If you have questions about your eligibility to file a Chapter 7 bankruptcy, are struggling to pay your debts, or facing legal action by a creditor The Washington Law Firm is here to help you break these chains of debt in the Central Florida Area. For a free consultation, please call 407-982-4130.
Chapter 7 Bankruptcy Discharge
At the end of the bankruptcy, all of your debts are wiped out or discharged by the court. A discharge releases you from personal liability for the debt and prevents the creditor owed that debt from taking any collection actions against you. You are no longer legally required to pay any debts that are discharged.