Under a Chapter 7 Bankruptcy, a debtor surrenders his or her non-exempt* property to a bankruptcy trustee. The trustee then liquidates the assets and distributes the proceeds to the debtor’s unsecured creditors. In exchange, the debtor is entitled to a discharge of some or all of the debt. As for secured debts (e.g. Car loans, home loans), the debtor can either surrender the property to the creditor/lender or they can reaffirm the debt. To reaffirm the debt, means to continue payments and keep the obligation/liability. If the debtor chooses to surrender the property (give it back to the lender), the debt is discharged. The debtor must qualify by household income and a “means” test to be able to file under Chapter 7.
*Exemptions are state specific and include such items as your home, car and some personal assets. Your attorney can help you determine your exemptions and also work with you to determine your eligibility using the “means” test. When a debtor cannot meet the eligibility requirements of Chapter 7, then Chapter 13 may be an alternative.
What debts can be included in a Chapter 7 Bankruptcy?
Unsecured, personal loans
What debts cannot be included in a Chapter 7 Bankruptcy?
Federally guaranteed student loans
Certain taxes – IRS liens
What are the basic procedures/time frame for a Chapter 7 Bankruptcy?
Step 1 – discuss your situation with your attorney to determine what is the most beneficial plan of action for you (Contact our office now for assistance –link to contact form)
Step 2 – determine your finances (income and debts) – gather proof of all
Step 3 – complete the financial disclosures for the court, a credit report is pulled
Step 4 – credit counseling class is completed
Step 5 – meet with the bankruptcy trustee
Step 6 – a waiting period of 90 days is required for your creditors to respond or dispute
Step 7 – a discharge is filed
What is next?Begin credit restoration.
Florida Consumer Law Center, P.A. realizes the difficulty in making the decision to file for bankruptcy. We offer the expertise of Charles Cadrecha, Esq. in handling your case as well as credit restoration assistance once your case is discharged.
Contact our office now for assistance.