Chapter 7 Bankruptcy Information Sheet

Understanding Chapter 7 Bankruptcy in Florida

Chapter 7 bankruptcy, also known as “liquidation bankruptcy,” allows individuals to discharge most unsecured debts, such as credit card bills, medical bills, and personal loans. In exchange, some of your assets may be sold to repay creditors. However, Florida offers generous exemptions to protect most of your property, ensuring you can keep essential assets.

Who Can File for Chapter 7 Bankruptcy?

To qualify for Chapter 7 in Florida, you must meet the following requirements:

• Means Test: Your income must be below the median income for your household size in Florida. If your income exceeds this amount, you may still qualify based on other financial circumstances.

Florida Median Income Limits (as of 05/15/2024):

• 1 person: $62,972
• 2 people: $77,639
• 3 people: $89,908
• 4 people: $104,069
• Add $9,900 per additional person for larger households.
• Previous Bankruptcy Filings: You cannot have received a Chapter 7 discharge in the last 8 years or a Chapter 13 discharge in the last 6 years.
• Ability to Repay Debts: Chapter 7 is for individuals who do not have the means to repay significant debts. If you can afford a repayment plan, Chapter 13 bankruptcy may be more suitable.

Florida Bankruptcy Exemptions

Florida allows you to protect certain property from liquidation under Chapter 7 bankruptcy. Key exemptions include:

• Homestead Exemption: Unlimited value for your primary residence, provided it does not exceed 0.5 acres in a city or 160 acres in a rural area.
• Personal Property Exemption: Up to $1,000 worth of personal property (or $4,000 if you do not claim the homestead exemption).
• Motor Vehicle Exemption: Up to $5,000 in equity in a vehicle.
• Wages: Wages earned by the head of household are generally exempt from garnishment.
• Retirement Accounts: Most retirement accounts, such as 401(k)s and IRAs, are fully exempt.

These exemptions help protect most of your essential assets, but it’s important to consult with an attorney to review your specific situation.

Debts Discharged in Chapter 7 Bankruptcy

The following unsecured debts are typically discharged in Chapter 7 bankruptcy:

• Credit card debt
• Medical bills
• Personal loans
• Payday loans
• Past-due utility bills

However, some debts cannot be discharged, including:

• Child support and alimony
• Certain tax debts
• Student loans (except in rare circumstances)
• Debts arising from fraudulent activity
• Debts from personal injury lawsuits (e.g., DUI-related claims)

The Chapter 7 Bankruptcy Filing Process in Florida

1. Credit Counseling: You must complete a credit counseling course from an approved provider within 180 days before filing.
2. File the Petition: Complete and file the necessary bankruptcy forms with the bankruptcy court in your district. The filing fee is typically $338, though fee waivers may be available for low-income filers.
3. Automatic Stay: Once your case is filed, an automatic stay goes into effect, halting most collection actions, including foreclosures, repossessions, and wage garnishments.
4. Meeting of Creditors (341 Meeting): Approximately 20 to 40 days after filing, you must attend a meeting with the bankruptcy trustee and any creditors. You will answer questions under oath regarding your finances and bankruptcy filing.
5. Trustee Evaluation: The trustee will review your assets and decide if any non-exempt property will be sold to repay creditors.
6. Discharge: If everything is in order, the court will discharge your eligible debts, typically 4 to 6 months after filing.

After Filing for Chapter 7 Bankruptcy

• Debtor Education Course: You must complete a debtor education course before receiving your discharge.
• Rebuilding Credit: Chapter 7 bankruptcy will remain on your credit report for 10 years. However, many people are able to rebuild their credit and qualify for loans or credit cards within 1 to 2 years post-filing.

Advantages of Chapter 7 Bankruptcy

• Quick Discharge: Most cases are completed within 4 to 6 months.
• Immediate Relief: The automatic stay provides immediate protection from collection efforts.
• Fresh Start: Discharge of most unsecured debts allows you to start rebuilding your financial life.

Disadvantages of Chapter 7 Bankruptcy

• Loss of Non-Exempt Property: Non-exempt assets may be sold to repay creditors.
• Credit Impact: Chapter 7 bankruptcy will affect your credit score for up to 10 years.
• Limited Debt Relief: Some debts, such as child support and student loans, are not dischargeable.

How to Get Started

If you’re struggling with overwhelming debt, filing for Chapter 7 bankruptcy in Florida could provide the relief you need. Contact our office for a free consultation, and we’ll help you determine if Chapter 7 is the right solution for your situation.

Information Accuracy: The information presented here is accurate from 05/15/ 2024. It’s important to consult a bankruptcy attorney to review the most current laws and apply them to your unique circumstances.