Chapter 7 Bankruptcy Florida

Chapter 7 bankruptcy enables a person who no longer has the financial means to pay back their to debts to start a fresh. Chapter 7 is also known as 'liquidation' bankruptcy as it entails converting non exempt assets into cash to pay off the debtors creditors.

The chapter 7 bankruptcy trustee is a federal appointed court  official who has the role of identifying which of the debtors assets are non-exempt (not protected) under the bankruptcy code of law. The trustee is also responsible for selling the assets and distributing the proceeds to pay off the outstanding creditors. The trustee will collect their commission from the net proceeds of the liquidated assets.

Chapter 7 Bankruptcy Florida Means Test

To become eligible for chapter 7 you will need to take two means tests. The first means test is to compare your household income to the median income level of a similar sized family in Florida. The aim of this means test is to determine the criteria that requires to be met within the second means test. If your household income exceeds the states median household income it does not mean that you will not be eligible for chapter 7.

The second means test is to determine the amount disposal income you have left after expenses and how this net income compares to the amount of unsecured debts that are outstanding. Making this comparison enables your bankruptcy lawyer to determine if you have enough disposable income that can be used to settle any of your debts. Your available disposable income will be forecasted over a period of five years. To pass the second means test your disposable income needs to be less than your unsecured debts.

If you pass either one of the means tests you will be eligible for chapter 7. If you fall into a borderline category were your 5 year forecasted disposable income exceeds Florida's family household median income but the percentage is lower than the allowable unsecured debts, should be enough to still make you qualify.

When you have passed you can begin the process of filing a bankruptcy petition. To prepare a bankruptcy petition it is recommended that you use the expertise and knowledge of a good bankruptcy attorneys firm.

In a situation were you do not pass both means test then your attorney should offer alternative options to re-organize your debts. One such option is filing for Chapter 13.

Chapter 7 Bankruptcy Florida Exemptions

Chapter 7 Bankruptcy in Florida is similar to the rest of the states in then country because it is governed under federal law. However, there are exceptions in certain area such as the exemption limits on certain properties. Exemptions, are a form of asset protection that allows certain assets and the value tied up in those assets to be kept by chapter 7 debtors during and after bankruptcy.

Exemptions enable a person who is filing for bankruptcy to protect certain properties from being sold to pay off their creditors. Exemptions relate to protecting the equity within several property classes such as a persons residential home, vehicles, insurance, pensions, child support,personal property and salaries.

Equity means the difference in the market value of the property and the amount that is still owed. For example, if the market value of a house is $200,000 and you owe a $75,000 mortgage then the equity is $125,000.

In relation to a persons home where the the property is secured by a mortgage the exemption will protect the equity as long as the person is paying the monthly payments. If this is the case then they can keep the house.

Where the equity exceeds the limit then, the trustee can sell the asset, pay the debtor their equity limit and the remaining proceeds from the sale or used to pay off the creditors and the trustees commission. However, if you have a bankruptcy lawyer representing your case they can negotiate what is a called a 'buy back' of the non-exempt property.  This means that you can buy back the asset through an agreed payment plan which is usually paid over one year.

If you do not wish to lose any assets or avoid a foreclosure you may want to consider filing for chapter 13 bankruptcy in Florida. With this type of bankruptcy you can buy back your property over a 3 to 5 year time period.

Homestead Exemptions

One of the key exemptions in a chapter 7 bankruptcy case is the homestead exemption. This relates to a persons property and home. This is key because for many people their house can be the most valuable asset not only in value but also in emotional attachment. Their home is what most people are afraid of losing.

Bankruptcy law recognizes that people who are filing chapter 7 will need at least the basic essentials to survive which includes a roof over their head. Under the homestead exemption the equity in a persons resident property can be protected.

In certain states there are limits to how much equity in the house can be protected. However, under Florida chapter 7 bankruptcy exemption laws there are no limits as long as the property does not exceed the acreage restrictions. However, these exemptions apply to a person  who is a a permanent resident of Florida. Those who have recently moved to the state of Florida may not qualify.

Personal Property Exemptions

A person filing for bankruptcy in Florida can claim an amount up to $1000 on personal property. For those filing who do not claim any benefits from their homestead exemption can claim an amount up to $4000 on personal property. Under Florida statutes a couple filing chapter 7 are both eligible for these exemptions.

Vehicle Exemptions

An exemption of up to $1000 on any vehicle.

Insurance Exemptions

The value of insurance including annuities is unlimited and protected from creditors

Salary/Wage Exemptions

Wages and salaries are exempt however, there are certain restrictions applicable.

The above does not cover all exempt property as these can also include medical equipment and income derived from disability allowances. For full details of all Florida asset protection exemptions it would be best consulting with an attorney.

Implications Associated With Chapter 7

The key implication of Chapter 7 is losing your assets. Although you can represent yourself the expertise of an experienced lawyer fighting your case in the bankruptcy court could save you the assets from your estate worth considerably more than the legal costs in hiring one.

A bankruptcy lawyer can provide important advice on what properties you can exempt and cannot exempt. For example, properties that are not exempt are stocks and shares, certain bank accounts, certain taxes etc. A key element when filing a petition is to include an schedule that itemizes the properties that you wish to exempt. This is a crucial process and if any details are falsified you could be prosecuted for fraud and lose your right to file for bankruptcy.

Chapter 7 Bankruptcy Florida Cost & Attorney Fees

There are fees for filing a chapter 7 that currently cost $299

If you are not eligible for chapter 7 and opt for chapter 13 the filing fee will cost $274

Attorney fees can vary even at a district level. They can be as low as $400 or over $1000 depending on the firm.

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