Helping Floridians Find a Fresh Financial Start
No one plans to become encumbered with debt, but life can unfortunately throw us curveballs. Getting laid off, losing income, or experiencing a devastating medical injury can lead even the most financially responsible individual to a scenario where they are drowning in debt. If you are having to decide whether to pay rent and feed your family or make payments that barely put a dent in your debt load, it may be time to consider filing for Chapter 7 bankruptcy.
Chapter 7 tends to make the most sense when you have relatively few assets and you presently suffer from a low level of income. With the right planning, Chapter 7 can clear much of your debt, with minimal impact to your property, and chart you toward a fresh financial future.
At Cremeens Law Group PLLC, we have helped numerous clients escape an endless cycle of debt. Our Chapter 7 bankruptcy lawyers in Tampa can help determine if you are eligible, prepare your estate for liquidation, and represent you in each step of the process.
“I want to congratulate you all and say THANK YOU for your extraordinary efforts and participation in this sale/judgement/legal process”- Christopher S.
How to Qualify for Chapter 7
To qualify for Chapter 7, you must pass Florida’s Means Test. This generally occurs in one of two ways:
- Automatically qualify if your household’s current monthly income is under the state’s median level of income for your household size.
- If your household income exceeds the median, you will be required to go through the full Means Test process.
What is the Means Test?
The full Means Test is the second way to qualify for Chapter 7 and requires a more thorough evaluation of your financial circumstances. Through a complex series of formulas, you will approximate your household level of “disposable income,” or the money left over after you subtract qualifying expenses from your current level of income.
Through the Means Test, the state of Florida is trying to determine is whether you have a sufficient level of income to continue paying some of your debts in an effort to prevent abuse of Chapter 7. If it is determined your household’s level of disposable income is too high, you will likely still be able to file for Chapter 13 bankruptcy.
If you pass the Means Test, you should also understand that a bankruptcy court will also consider whether you are attempting to defraud your creditors. Note they will also check if you have filed for bankruptcy within the last few years, as there are restrictions on how often you can file.
How Often Can You File Chapter 7 Bankruptcy?
If you’re planning to file for Chapter 7 bankruptcy after having already filed before, you will have to wait eight years. If you filed for Chapter 13 bankruptcy previously and are planning to file for Chapter 7 bankruptcy now, you will have to wait six years before you can file.
How to File for Chapter 7
There are typically 6 steps to filing for Chapter 7:
- Complete a mandatory credit-counseling course that is approved by the U.S. Trustee Program 180 days before you file.
- Complete the bankruptcy forms.
- Mail a copy of your most recently filed income tax return to the bankruptcy trustee. If they request more information, be sure to submit it right away.
- 30 days after filing, attend a creditor’s meeting. These are usually short and do no last longer than 5 minutes.
- No later than 60 days after the creditor’s meeting, attend a mandatory budget counseling course. Mail a copy of the certificate of completion to the bankruptcy court.
- Don’t sell any property without your bankruptcy trustee’s permission until the court sends you a letter that confirms your debts have been discharged. This typically arrives 60 - 75 days after the creditor’s meeting.
Automatic Stay and the Liquidation Process
If you qualify for Chapter 7 bankruptcy, you will file in the Florida bankruptcy district (Southern District, Middle District, or Northern District) in your county of residence. The court will promptly issue an “automatic stay,” which freezes collections actions against you. This means foreclosure or repossession efforts will be halted, lawsuits pursuing unpaid debts stopped, and creditors will no longer be able to contact or harass you.
Next, the liquidation process begins. This can sound scary, but it does not have to be with the right planning. All of your nonexempt assets will be transferred into a trust managed by an appointed trustee, who administers the sale (or liquidation) of the assets. The proceeds are used to pay back your creditors. Fortunately, the state of Florida has some of the most generous exemptions in the country, giving you the opportunity to retain many of your critical assets through the liquidation process.
The Florida homestead exemption allows you to exempt an unlimited amount on your home or any property covered under the homestead exemption’s terms. This is a huge boon for debtors that can help them protect their home or other property from liquidation.
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