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Chapter 7 Bankruptcy FAQs

What is Chapter 7 Bankruptcy and How Does It Work?

In a Chapter 7, a debtor turns in their nonexempt property to a trustee, who then liquidates it to pay creditors. Most cases; however, are called “no-asset” cases because the debtors don’t have any non-exempt assets or are so minimal the trustee will disclaim and abandon it in favor of the debtor.  Florida’s exemptions are very favorable!

What is Chapter 7 Discharge?

A federal court order relieving you of liability from the debt. It further provides a discharge injunction which prohibits creditors from contacting you or trying to collect on the debt!

What Kind of Debts Are Not Dischargeable Under Chapter 7?

The following types of debt may not be dischargeable under Chapter 7: (there are intricate rules; however, so it is important to speak with an experienced attorney if you feel any of these apply to you)

  • Most newer tax debts.
  • Debts obtained by means of false pretenses, fraud, or a false financial statement.
  • Debts for fraud, embezzlement, or larceny, if the creditor files a complaint in the case.
  • Debts for alimony, child support and certain other divorce related debts like property settlement debts.
  • Debts for intentional or malicious injury to persons or property of another.
  • Debts for certain fines and penalties.
  • Student Loans unless a court finds an “undue hardship” (Currently a very difficult standard to prove).
  • Debts for personal injury or death caused by the debtor’s operation of a motor vehicle while intoxicated.
Where Is My Chapter 7 Case Filed?

Bankruptcy Venue is in the district where the debtor has resided or maintained a principal place of business for the greatest portion of the last 180 days. The West Palm Beach division comprises Palm Beach County, Martin County, St. Lucie County, Indian River County, Highland County and Okeechobee County.

What Exemptions Will Apply to My Case?

This is a great question.  In order to take advantage of Florida’s favorable property exemptions, you must have been a resident of Florida for the last two years.  If you have not lived in Florida for two years, the state you lived the majority of time in for the six month period preceding the previous two years, would be the applicable state exemptions.

What Is An Automatic Stay?

Filing a bankruptcy case automatically stays (stops) virtually all collection and other legal proceedings pending against the debtor.  Any creditor who intentionally violates the automatic stay may be held in contempt of court and may be liable to the debtor in money damages. Criminal proceedings, actions to collect alimony, maintenance, or support or property acquired by the debtor after the Chapter 7 case was filed are not affected by the automatic stay. The automatic stay also does not protect co-signers and guarantors of the debtor.

I Am Currently In A Debt Consolidation Plan, Can I Still File Bankruptcy?

Yes. We routinely file bankruptcies for clients currently in “debt-relief” consolidation plans.  Let us show you why Bankruptcy is better.

How Does Filing Under Chapter 7 Affect A Person's Credit Rating?

First, if you are currently exploring the possibility of bankruptcy, the odds are pretty good that your credit score is already in the dumps or will be very shortly.  And in the immediate short-term, a bankruptcy filing will “usually” worsen it, if that is possible. HOWEVER,  the advantage to filing a bankruptcy is you are finally addressing the debt rather than the derogatory information just continue to sit there.  In other words, the bankruptcy will provide you with the proverbial “line in the sand” so you can start to effectively and quickly rebuild your credit.  If you do the right things post-bankruptcy, we routinely see our clients build up their credit into the 700’s and even qualify for mortgage loans.

Will My Friends and Neighbors Know That I Filed For Bankruptcy?

Very unlikely.  Bankruptcy filings are public record just like any court filing; however, to see any information would require you to sign up for, pay for, and know how to use the court pacer system.  Some smaller papers still list said filings in the very small legal sections; but, with the collapse of print media, even that is very rare anymore.

What Is The Trustee In A Chapter 7 Case, And What Is There Role?

A trustee is appointed to examine the debtor, collect nonexempt property (if any), and pay the expenses of the estate and the claims of creditors. They are also in charge of seeing to it that the debtor performs the required duties in the case.

Do I Have To Go To Court When I File A Chapter 7?

No, it is very rare that you will have to go to court. Instead, all debtors are required to attend a hearing called the “341 meeting of the creditors.” This hearing usually takes place about a month after the case is filed. At this hearing the debtor is put under oath and questioned about his or her debts and assets by the hearing officer or trustee.  It is very short and usually informal.

What Happens To The Property That The Debtor Turns Over To The Trustee?

It is usually converted to cash, which is used to pay the fees and expenses of the trustee and to pay the claims of unsecured creditors.  If you have priority creditors, like taxes and child support, all of the funds will go to satisfy them first!

What Happens To My "Secured" Debts When I File A Chapter 7 Case?

The filing of a Chapter 7 really does not involve secured debts to a certain extent, unless you are choosing to surrender the property in which case the creditor will get to sell the asset and file an unsecured claim for any deficiency.  If you are filing a Chapter 7 and are not current with your car and/or house payments, the bankruptcy will “NOT” help you get caught up..you would have to ensure that you could quickly get caught up or work something out with the creditors on your own; otherwise, they will be permitted to foreclose or repossess the collateral.  If you are current on the debt than usually there is nothing to worry about, you simply continue to pay timely and you can even reaffirm the debt.

How Long Does It Take To Get My Discharge?

You will attend your mandatory 341 Meeting around a month after we file your case.  60 days after that hearing is held, and assuming you have complied with all requirements and no creditors have filed an objection to the discharge of your debts, the court will issue the discharge order.  You will receive an electronic copy from us immediately and you will get a hard copy from the court as well. So, roughly it takes 90 days to complete a Chapter 7 and begin anew!

What If I Still Want To Pay A Debt That Has Been Discharged?

There is nothing illegal about you voluntarily paying a debt that has been previously discharged; however, you control that process, the creditor cannot try to collect.  It may sound silly that you would want to pay a debt that has been discharged but it does happen, usually due some sense of moral obligation. Examples are debts owed to your personal doctor’s office because you want to be able to see him/her still or you have a co-signor still responsible on a debt that you want to ensure they don’t to pay.

Chapter 7 Bankruptcy Attorney, West Palm Beach

Bankruptcy Lawyers Serving Palm Beach County, Martin County, St. Lucie County and Indian River County – West Palm Beach, Palm Beach Gardens, Rivera Beach, Lake Worth, Delray Beach, Boynton Beach, Jupiter, Wellington, Boca Raton, Royal Palm Beach, North Palm Beach, Lantana, Juno Beach, Greenacres, Belle Glade, Tequesta, Lake Park, Haverhill, Stuart, Hobe Sound, Port St. Lucie, Palm City & Fort Pierce

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