Chapter 7 Bankruptcy Guide
Chapter 7 bankruptcy, or “liquidation” bankruptcy, is a legal process designed to help individuals or businesses eliminate unsecured debts. In Florida, as with other states, Chapter 7 bankruptcy is a viable option for those dealing with overwhelming debt. While governed by federal law, Chapter 7 Bankruptcies also involve specific Florida statutes and exemptions.
What is Chapter 7 Bankruptcy?
Chapter 7 bankruptcy is when the debtor’s assets are sold or liquidated to pay off creditors. Not all assets will be sold; federal or state exemption laws protect some assets. Florida, individuals filing for Chapter 7 bankruptcy may be able to keep their homes, a certain amount of personal property, and possibly their cars, depending on the equity they have in those assets.
Once a Chapter 7 bankruptcy is completed, the debtor is freed from the obligation to repay the unsecured debts that were included in the bankruptcy filing. This means that creditors cannot take further collection actions on those debts.
Qualifying for Chapter 7 Bankruptcy in Florida
To qualify for Chapter 7 bankruptcy in Florida, you must pass a “means test.” The means test compares your income to the median income for a household of your size in Florida. If your income is below the median, you qualify. You may still qualify based on certain allowed expenses if it’s above the median.
If you don’t pass the means test, you can file for bankruptcy under Chapter 13 instead, which involves creating a repayment plan to pay off your debts over three to five years.
Florida Chapter 7 Bankruptcy Exemptions
Florida has its own set of bankruptcy exemptions that dictate what property and assets you can keep in a Chapter 7 bankruptcy. Some of these exemptions include:
Homestead Exemption: There is no dollar limit to the homestead exemption in Florida. You can exempt any amount of equity in your home or mobile home if the property is less than half an acre in a municipality or 160 acres elsewhere.
Personal Property Exemption: Up to $1,000 of personal property (furniture, art, electronics, etc.) can be exempted. If you do not use the homestead exemption, you can exempt up to $4,000 of personal property.
Motor Vehicle Exemption: Up to $1,000 in vehicle equity is exempt. If the vehicle is jointly owned, the exemption doubles.
Please note that bankruptcy is a complex process, and it’s usually in your best interest to consult with a bankruptcy attorney who understands the laws and procedures in Florida. They can guide you through the process and ensure you’re making the best decisions for your financial future. Call Hakanson Law today at (813) 480-0882 or complete our contact form to schedule your free consultation. Let us provide the guidance you need to navigate the complexities of bankruptcy and pave the way to a brighter future. Don’t wait-your financial relief starts now!
Disclaimer: This information is not intended as legal advice. Please consult a legal professional for advice pertaining to your specific situation.