An Overview Of Chapter 7

Last Updated: Saturday, April 25, 2020

A Chapter 7 bankruptcy discharges or wipes out many (most) debts and allows you to keep property which Florida has declared as exempt. Depending on individual circumstances, the exemptions are often generous, and couples and individuals with an average amount of assets will often maintain much, if not everything, which they owned prior to the bankruptcy filing.

A Chapter 7 bankruptcy will stop garnishments and harassment, both immediately and permanently. It will temporarily stop repossessions, lawsuits and foreclosures, and in many cases afford an opportunity to do so permanently. It will eliminate credit card debt, medical bills, and most tax claims that have not recently accrued.

A Chapter 7 is not a choice for you if you are behind on your mortgage and are trying to keep your home. In that case, you should consult us concerning a Chapter 13 filing.

There are income‑based limits on who may file Chapter 7. These limits compare your income to your reasonable and necessary expenses by a process called the "means test." The means test is complex and therefore it is important to speak with us so we can properly advise you of whether you qualify to file a Chapter 7. Do not rely on the Internet to figure it out yourself. Chapter 7 can be of particular usefulness if:

• Your financial problems are mainly credit card, consumer loans, or medical bills;
• You owe old taxes, filed and assessed income taxes (over three years old);
• You rent, or are current (or nearly so) on your mortgage;
• You are current (or nearly so) on your car payment, or your car is worth less than you owe on it, or has limited to no equity; and/or
• You are not looking to discharge child support, and in all but very limited circumstances, student loan debt (neither is generally dischargeable).

Chapter 7 might be a good fit for you. In the words of the United States Supreme Court, a Chapter 7 filing "[G]ives to the honest but unfortunate debtor a ... new opportunity in life and a clear field for the future effort, unhampered by pressure and discouragement of pre‑existing debt."

Please call us to schedule your appointment for a Free Bankruptcy Consultation at one of our two conveniently located bankruptcy law offices either in Fort Lauderdale or Gainesville.