Chapter 7 bankruptcy in Florida is also known as liquidation bankruptcy. Filing chapter 7 allows you to erase most of your debts, including credit card bills, medical bills, and repossession balances. You can then get a fresh start. You will have to give up any non-exempt property to pay back creditors, but Florida has relatively generous property exemptions, including homestead property. A Florida bankruptcy lawyer can guide you through the entire process.
Whether you are eligible to file Chapter 7 bankruptcy or whether you must file Chapter 13 bankruptcy depends on the results of a means test. If your income is below Florida’s median, you should automatically qualify for Chapter 7 bankruptcy, but if your income is above the state median, the means test is necessary. As of 2019, the state median for various households are:
There is little, if any, disposable income available for households with similar or lower annual income than these.
Under Florida’s bankruptcy laws, you must undergo credit counseling prior to filing for bankruptcy. After filing, you must undergo a financial management course.
If you previously filed Chapter 7 bankruptcy and your debts were discharged, or forgiven, you must wait eight years to file Chapter 7 bankruptcy again. The eligibility date is based on the filings, so if you filed Chapter 7 bankruptcy on May 1, 2011, you cannot file a Chapter 7 bankruptcy again until May 1, 2019. However, if you did not receive a discharge in your previous bankruptcy, there is no waiting period for filing another Chapter 7 bankruptcy petition.
Putting the necessary paperwork together is one of the initial parts of filing for Chapter 7 bankruptcy, and it is extensive. You will need to provide the court with your:
When filing a business, or corporate Chapter 7 bankruptcy, all non-exempt corporate assets are liquidated. Business bankruptcies include corporations, sole proprietorships, and partnerships. It is the right choice to make when it is obvious the business has failed, debt repayment is beyond the company’s ability, and reorganization is not a possibility. If reorganization is a possibility, filing Chapter 11 or Chapter 13 bankruptcy is the better option. You cannot discharge business debts via a personal Chapter 7 bankruptcy, but must file a separate Chapter 7 bankruptcy for the business.
As soon as you file Chapter 7, expect the creditor harassment to cease. Lawsuits and wage garnishments related to your debt are done. Once you file chapter 7 bankruptcy, a court-appointed trustee sells the property that Florida does not consider exempt under its bankruptcy laws and pays creditors with the proceeds.
While you will likely lose some property after filing a Chapter 7 bankruptcy, Florida exemption laws allow you to keep a great many of your belongings. If you own a primary home in Florida, the homestead exemption permits you to keep all of your equity if the dwelling is located on a half-acre or less in a municipality, or up to 160 acres in a rural setting. However, if you have a mortgage on the property, that debt is not discharged when you file for Chapter 7 bankruptcy, and you may find yourself facing foreclosure if you cannot make your monthly mortgage payments.
If you are not a homeowner, you are eligible for the state’s so-called “Wild Card” exemption, which allows you to keep up to $4,000 of property of your choice. For some people, that may mean not having to give up treasured jewelry to the court-appointed trustee for sale, while others may decide to add the $4,000 to their motor vehicle.
Under Florida law, a person can only exempt up to $1,000 of equity in one motor vehicle after filing Chapter 7. You can also exempt personal property under Chapter 7 bankruptcy with a value of up to $1,000. That means many people can keep their furniture and similar items under this provision, but big-ticket items are sold by the trustee.
Other exemptions in Chapter 7 include pensions and other retirement accounts, such as 401(k)s, SEP and SIMPLE IRAs, and traditional and Roth IRAs. The same holds true for Social Security benefits. If you have reached the age of 59.5, you can make withdrawals from retirement accounts and live off the proceeds of these accounts without penalty. The cash surrender value of any life insurance policies you hold is also exempt.
Besides a mortgage, there are other debts that are not discharged in Chapter 7 bankruptcy, and you must continue paying them. These include back child support, student loans, and back taxes. Car loans are not discharged in the sense that if you stop paying your loan, the lender can repossess your vehicle.
Bankruptcy is usually the best way, and often the only way, to resolve a situation when your debts are overwhelming. Anyone considering filing Chapter 7 bankruptcy requires the services of an experienced Florida bankruptcy attorney. Call us today or contact us online for a free consultation to discuss your options and see whether you qualify for bankruptcy. We will discuss means testing, answer any questions you have, and represent you throughout your entire bankruptcy proceeding.