Chapter 7 Bankruptcy Guide
Chapter 7 bankruptcy, also known as "liquidation" bankruptcy, can provide a fresh start for those struggling under the burden of unmanageable debt. This type of bankruptcy involves the sale of a debtor's non-exempt assets by the bankruptcy trustee, with the proceeds distributed to creditors. In many cases, debts are discharged, relieving the debtor from the obligation to pay them back. This guide will help you understand how to qualify for Chapter 7 bankruptcy in Florida.
Eligibility for Chapter 7 Bankruptcy
To qualify for Chapter 7 bankruptcy in Florida, you'll need to meet several criteria:
1. Income Level (Means Test)
First, you need to pass the "means test," which compares your income to the median income for a household of your size in Florida. The means test is a way to ensure that Chapter 7 bankruptcy is reserved for those who truly cannot afford to pay their debts.
If your income is below the Florida median for your household size, you are eligible for Chapter 7 bankruptcy. You may still qualify if your income is above the median, but you'll need to provide more detailed information about your income and expenses.
2. Previous Bankruptcy Filings
You cannot file for Chapter 7 bankruptcy if you have had a previous bankruptcy petition dismissed within the last 180 days due to failure to appear in court or comply with court orders or if you voluntarily dismissed the previous case after creditors sought court relief to recover property, they had a lien on.
3. Credit Counseling
Before filing for bankruptcy, including Chapter 7, you must complete a credit counseling course from an approved agency. This course needs to be completed within 180 days before filing.
Florida Bankruptcy Exemptions
When you file for Chapter 7 bankruptcy, certain assets may be sold to repay your creditors. However, Florida law allows you to protect, or "exempt," some property from being sold. Florida has its own set of bankruptcy exemptions, some of which include:
- Homestead Exemption: Unlimited value on your residence up to half an acre in a municipality or 160 acres elsewhere.
- Personal Property Exemption: Up to $1,000 of private property, or up to $4,000 if you do not use the homestead exemption.
- Motor Vehicle Exemption: Up to $1,000 in equity in your vehicle.
Bankruptcy law can be complex, and each individual's circumstances are unique. If you're considering bankruptcy, it's highly recommended that you consult an experienced bankruptcy attorney who can provide guidance tailored to your situation.
Disclaimer: This information is not intended as legal advice. Please consult a legal professional for advice pertaining to your specific situation.
