Florida Chapter 7 Bankruptcy Lawyer
Chapter 7 is also known as “liquidation bankruptcy” because it allows you to discharge most debts.
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Most people find themselves in financial trouble at some point in their lives. Things like divorce, loss of a job, unforeseen medical expenses, excessive use of credit (encouraged by some rather unscrupulous credit companies), and unforeseeable natural disasters as fires, earthquakes, and hurricanes can be the cause of financial distress.
Nonetheless, there are options for such financial emergencies, including Chapter 7 bankruptcy. We encourage our clients not to feel stigmatized by bankruptcy because bankruptcy is merely a financial tool designed to help them get through unexpected financial disasters like those described above. In most cases, it is the ethical and responsible thing to do, especially if you are supporting a family.
Although many people view bankruptcy as a negative event, the process actually provides consumers with a chance to have a fresh start and end their financial struggles. The three-month process is not as daunting as it may initially seem, and there are even ways to retain possession of certain property items. Ensuring that you take full advantage of your rights during the bankruptcy process and protect your financial interests can be difficult without the assistance of an experienced Fort Myers and Cape Coral Chapter 7 bankruptcy lawyer.
Is Chapter 7 Bankruptcy Right for Me?
Do you want to keep property like a home or a car and are behind on the mortgage or car loan payments? A Chapter 7 case probably will not be the right choice for you because Chapter 7 bankruptcy does not eliminate the right of mortgage holders or car loan creditors to take your property to cover your debt.
There are many benefits provided by Chapter 7 bankruptcy, including:
- Relief from creditor harassment
- Debt forgiveness
- Exemptions for your home and personal property
- Flexibility for your house payments
- Flexibility for your car payments
- Rebuilding your credit and credit score
What is Chapter 7?
In a bankruptcy case under Chapter 7, you file a petition asking the court to discharge your debts. The basic idea in a Chapter 7 bankruptcy is to wipe out (discharge) your debts.
You can discharge your debts in exchange for your giving up property. You do not give up your “exempt” property, which the law allows you to keep. In most cases, all of your property will be exempt. But property that is not exempt is sold, with the money distributed to creditors.
In many cases, a Chapter 7 Trustee will allow the Debtor to enter into a payment plan to repurchase their “non-exempt” assets.
How do I know if I am eligible?
To find out whether you are eligible for a Chapter 7 proceeding, you will need to examine information regarding your financial status, debt obligations, and income. If you have a minimal amount of disposable income after paying your monthly expenses, the chances are that you are eligible for Chapter 7 bankruptcy.
Means Test
Qualifying for Chapter 7 bankruptcy generally revolves around satisfying what is known as the “Means Test.” The Means Test is designed to limit the use of Chapter 7 bankruptcy to people who genuinely can’t pay their debts. The Means Test deducts certain monthly expenses from your current monthly income, i.e., your average income over the six calendar months before filing, to determine your “monthly disposable income.”
On what’s known as a “sliding scale,” the higher your monthly disposable income, the less likely you will qualify for Chapter 7 bankruptcy.
Naturally, each individual’s Means Test will depend on that individual’s particular circumstances. In other words, you won’t know if you “pass” the Means Test until you take it.
If you have received a Chapter 7 bankruptcy discharge within eight years of your current application, however, you will be precluded from receiving another Chapter 7 discharge.
About the Process
How long does it take?
Typically, Chapter 7 bankruptcy cases take between four to six months after filing the case with the court. The court’s order erasing eligible debts may be issued as early as 90 days from the filing date.
Chapter 7 Filing Roadmap
The process of filing Chapter 7 bankruptcy is fairly standardized:
- Consultation. Your first step is to have a preliminary meeting with a qualified bankruptcy attorney to help you decide whether a Chapter 7 bankruptcy is your best option and whether or not you are likely to qualify.
- Pre-Bankruptcy Counseling. Pre-bankruptcy counseling from a government-approved entity during the six months before filing for bankruptcy is required for any person who plans to file a bankruptcy.
- Retainer Agreement and Fees. Once you have decided to hire a lawyer and move ahead with bankruptcy, the retainer agreement with the attorney must be signed, and the required fees must be paid. In Chapter 7 cases, the fees must be paid in full prior to filing the case.
- Documents, Signatures, and Petition. Once the documents and figures are confirmed, you sign the bankruptcy petition and related documents.
- Creditors’ Meeting. After the petition is filed, the court will give notice advising you of the date and location of the Meeting of Creditors, which is the opportunity for the trustee to ask questions about the bankruptcy petition and your income and property.
- Post-Filing Debtor Education Counseling. After filing, you must take a debtor education course with an approved financial counseling entity, either in person, on the phone, or online. Once you have completed this course, you will receive a certificate as proof.
Key Facts About Chapter 7
- Many bankruptcies filed in the United States are brought under Chapter 7.
- Compared to Chapter 13 bankruptcies, a Chapter 7 proceeding does not involve any type of repayment plan.
- Additionally, a Chapter 7 proceeding does not involve a reorganization and continuation of a business.
- The majority of Chapter 7 filings are resolved within three months after the date of filing.
Will My Assets Be Protected?
Some of the first questions that debtors have for a Chapter 7 bankruptcy lawyer in Cape Coral or Fort Myers involve whether they will be able to protect certain assets and which types of debts can be forgiven. In general, credit card debts, medical bills, certain loans, deficiencies following repossessions, and foreclosures of homes can be forgiven in a bankruptcy proceeding. Some debts are not forgiven, including student loan debt and alimony or child support payment obligations. Court penalties and fines are also excluded from forgiveness in bankruptcy.
Additionally, certain exemptions and other methods can be used to protect a family home or a vehicle. To take advantage of these procedures, the debtor may be required to agree to any existing financing terms that apply to the property, such as a car loan. The debtor will need to be current on mortgage payments or enter into a contract with the mortgage provider to modify the agreement to retain a home.
How will Chapter 7 Impact My Credit?
It is a common myth that filing for bankruptcy will ruin your credit forever. The fact is, many people find that their credit score actually begins to improve shortly after filing. Yet another myth, mostly generated by scare-tactic commercials, is that a less-than-stellar credit score will ruin you financially. It will not. Like all negative information reported to the credit bureaus, bankruptcy will have a negative impact on your credit score. Because a bankruptcy filing is a public record, the credit bureaus will know about it.
However, unlike other negative information affecting your credit score, a bankruptcy filing is often the first step to building a good credit score. After your bankruptcy discharge is granted, your debt amount will be significantly reduced, leading to a lower debt-to-income ratio, which lenders love to see. In fact, you will likely be inundated with offers of credit, such as “pre-approved” credit cards.
A successful bankruptcy proceeding will remain on your credit report for the next ten years, but within 18 months of completing the process, you can begin establishing a strong credit rating. In fact, many debtors have had greater success fixing their credit through bankruptcy and starting fresh instead of working on their credit outside bankruptcy.
Contact a Florida Chapter 7 Lawyer Today
At Martin Law Firm, we offer each client the compassion, personal attention, and thorough legal guidance that they deserve. Our lead attorneys are husband and wife who treat the law firm much like a family business. We know how important your financial and personal assets are to your well-being. Take the first step toward securing a positive financial future, and contact us today to learn more about whether and how bankruptcy may be right for you.