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Debt can act like a burden that follows you for many years. Filing for bankruptcy is an option that, among other benefits, will cut off creditors and other lenders from being able to contact you or taking other collection actions. The process of filing can be demanding, but finding the right lawyer to support you gives you the right assistance and advice when you need it most. Having a bankruptcy lawyer means you’ll have an experienced professional to guide you through any necessary meetings and handle all of the extensive paperwork.
Bankruptcy may not be able to solve every case of debt, but for some situations can provide relief and offer a fresh start. If you’re debating on if this is the right decision for your situation, talk with a Florida bankruptcy attorney today, cost and commitment-free. There are different income and residency qualifications for every chapter, so read on to learn the requirements of filing for Chapter 7 bankruptcy in Florida.
Chapter 7 bankruptcy is sometimes referred to as a “liquidation” bankruptcy. This legal procedure discharges the petitioner’s unsecured debt after a trustee sells all applicable non-exempt assets held in the petitioner’s “bankruptcy estate.” Proceeds from the sale are distributed pro rata to creditors according to their assigned priority.
It’s important to note that Chapter 7 bankruptcy only involves debts that are unsecured. Unsecured debt is defined as a debt that isn’t guaranteed by collateral. This includes credit card debt, medical bills, and certain income tax debt.
Secured debt, such as a mortgage or a vehicle loan, will not be discharged in a Chapter 7 bankruptcy. Debt from child support and most overdue tax payments also do not usually qualify for discharge.
While the Chapter 7 bankruptcy filing process involves the liquidation of assets, you are allowed a wide range of personal exemptions. You can choose between using the federal exemption system or Florida’s state-specific exemptions, which happen to be among the most generous in the country.
If you have unsecured debt and are worried that bankruptcy will liquidate some of your beloved personal possessions, it may be beneficial to note that, using a national sample, only 7% of Chapter 7 bankruptcies resulted in assets to distribute to creditors. The remainder were “no-asset” cases where the petitioner exempted out all of their possessions. You can learn more about what debt can be forgiven under chapter 7 bankruptcy.
Everyone seeking to file Chapter 7 bankruptcy must first pass a means test to be considered eligible. This part of the filing process only concerns higher-income filers. If your yearly income falls under the Florida median for your household size, you can completely bypass this test and continue to file.
The Florida median income for a one-person household is currently calculated as $3,493 a month. This number will fluctuate depending on the size of your household and other considerations. If you are above this amount, you must complete the means test by declaring your total income, assets, and debt obligations.
Note that not every single cent of income or your possessions will be included, as there are individual exemptions or ways to set aside income that could not be reasonably used to repay your debts. Other exemptions to the means test include debt from veterans who accumulated a majority of their debt while on active duty or homeland defense.
Applicants who make more than the Florida median will have to submit documents that prove income and allowed expenses for a deduction. Then, their monthly income (over 60 months) will be determined, and if that amount is under $7,475 they will likely be eligible to continue filing a Chapter 7.
The purpose of the means test is to determine if you are able to pay back a portion of your debt without having to liquidate your assets. If you are found to have earnings above the means test threshold, you may be required to file a Chapter 13 bankruptcy instead of a Chapter 7 bankruptcy.
If the determined monthly income is over $12,475, then you’ll very likely have to move forward with another bankruptcy option. Any monthly income between $7,475 and $12,475 will require further calculations to determine eligibility.
There are three bankruptcy districts in Florida: Southern, Middle, and Northern Districts. You must file your petition within the right one based on your residency. A bankruptcy petition is a collection of documents that disclose all of your required financial information to the Bankruptcy Court.
Your petition will require you to report your monthly income and expenses, assets (real and personal property), as well as the liabilities and debts you wish to have forgiven. This petition is then signed under oath.
Once your petition is filed, an automatic stay is enacted for your case. This automatic stay is immediate protection against collectors while your case is going through the post-filing process. A bankruptcy petition will involve a meeting with a court-appointed trustee to assess the provided information and ask any questions they have about your finances while you’re under oath. You are entitled to have your attorney present at this meeting. While the purpose of the meeting may sound intimidating, know that it isn’t as scary as it seems. The meeting is typically held in a conference room, not a courtroom, and the trustee is not allowed to threaten or interrogate the debtor, only ask general financial questions.
Known as the liquidation chapter of bankruptcy, it is important to understand the difference between exempt and non-exempt assets when filing for Chapter 7.
All exempt assets are protected from being sold to repay collectors, but any non-exempt assets will be surrendered, by you, to pay off a portion of your unsecured debt. Over 90% of bankruptcies are filed as “no-asset” cases because the debtor does not have sufficient liquidable assets, meaning they walk away surrendering nothing. Even if you are a no-asset case, you can still have your debt discharged provided you complete the filing as required.
Examples of non-exempt assets include:
Typical exempt assets may include:
There is a lot to think about when you’re planning on moving forward with bankruptcy. While it may affect your credit history and ability to take out a personal loan, you will ultimately be left with some desirable benefits in most situations. Your unsecured debt could be erased, you can finally put together a clear budget without being overwhelmed by collections notices — all while in many cases keeping the assets most important to you.
The bankruptcy process doesn’t have to be overwhelming, and appointing your own attorney can help immensely. In fact, the U.S. Bankruptcy Court website explicitly recommends that petitioners work with an attorney to assist them with the filing process, as public employees and other court officials involved in your case cannot provide advice nor even answer certain specific questions, like how to complete your forms.
Fortunately, there are experienced attorneys at Hoskins, Turco, Lloyd and Lloyd available to assist you. We have been in business for over 35 years, helping people like you seek the best outcome possible from a bankruptcy case. When you work with us, your initial consultation comes with no obligation and is completely free!
Contact us online or call (866) 460-1990 to schedule your free case review today, and get back on the path to having less worry and a bright future ahead.
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