Bankruptcy happens for a variety of reasons, but they can all be summed up in a word: debt. And, if you are a resident of Florida or own property here, you may wonder how to deal with your overwhelming debt. The most popular option is Chapter 7 bankruptcy, but you may not know what it is, how it works or whether it is right for you.
What is Chapter 7 bankruptcy?
Chapter 7 bankruptcy is the legal process where you can eliminate (discharge) most of your unsecured debts. Unsecured debts are debts, like your credit cards, payday loans, personal loans, medical bills and even some tax debts.
Though, to get your debts eliminated, the bankruptcy trustee will sell your non-exempt assets to pay off some of your debts. Though, most filers can keep most of their property because Florida has some of the most generous bankruptcy exemptions.
Relatively quick and easy
Typically, a Chapter 7 bankruptcy case can take as little as 3 to 6 months, depending on the court’s workload. Depending on the complexity of your case, you may need to only attend one trustee/creditor meeting (341 meeting). And, you do not have to follow any type of repayment plan. Plus, at the end, most, if not all, of your debts disappear.
Stops collection actions
As soon as your Chapter 7 bankruptcy petition is filed, you get an automatic stay. This stops all collection actions against you.
That means creditors cannot contact you, sue you or even collect on successful lawsuits. It also stops repossessions and foreclosures. And, this automatic stay is in place until your case is concluded.
Generous bankruptcy exemptions
Florida has some of the most generous bankruptcy exemptions in the United States. This means that our state protects your property from being taken by the trustee.
Here, up to a million dollars in home equity is protected in your primary residence (homestead). You can exempt up to $4,000 in personal property, $1,000 of vehicle equity and another $1,000 in other property.
Though, if you do not have a homestead, you can exempt an unlimited amount of personal property, and up to $4,000 in other property.
Not everyone will qualify for Chapter 7 bankruptcy, though. This is why you need to understand the law prior to filing the Chapter 7 bankruptcy petition.