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Orlando Chapter 7 Bankruptcy Filing - John T Snow Orlando bankruptcy attorney

AN OVERVIEW - Chapter 7 Bankruptcy Florida 

Attorney John T. Snow offers a free initial consultation to determine if you qualify for Chapter 7 bankruptcy and answer your questions about your bankruptcy options. Both individuals and businesses may find themselves with more debts than they can pay when due. Attorney John T. Snow can advise individuals and businesses about whether Chapter 7 is the right choice for them.

Chapter 7 Relief

Chapter 7 bankruptcies, also called "straight bankruptcies," are the most common form chosen by individual consumers. In a Chapter 7 consumer bankruptcy, the individual debtor's estate is liquidated and the assets are distributed to creditors.

Corporations and partnerships are also eligible to file under Chapter 7. However, unlike individuals, these business entities do not have the benefit of any exemptions (see below) and they are not eligible to receive a discharge. And so a Chapter 7 liquidation and distribution is not the best option for Corporations and partnerships that wish to keep doing business.

Chapter 7 Bankruptcy Proceedings - Chapter 7 Bankruptcy Florida 

The Petition and the Automatic Stay

A Chapter 7 case begins with the debtor's filing of the petition with the bankruptcy court, which triggers the automatic stay— bankruptcy terminology for the termination of all debtcollection activity. Filing a petition does not stay certain types of actions, and the stay may only be in place for a limited period of time. As long as the automatic stay is in place, creditors may not initiate or continue lawsuits against the debtor, garnish wages or call the debtor demanding payments.

Certificate of Credit Counseling

At the time he files his Petition, the debtor must also file a certificate of credit counseling and a copy of any debt repayment plan.

Additional Documents - Chapter 7 Bankruptcy Florida 

Within the next 15 days from the filing of the Petition and Certificate of Credit Counseling, the debtor must file all other required documents, including: a schedule of assets andliabilities; evidence of any payments made by an employer received 60 days before filing; a schedule of current income and expenditures; a statement of financial affairs; and a schedule of executory contracts and unexpired leases. In the usual case, all documents, including the Petition and the Certificate of Credit counseling, are filed at the same time.

The “Means Test” - Chapter 7 Bankruptcy Florida 

There are additional filing requirements for individual debtors with primarily consumer debts. These debtors must file a statement of current monthly income and “means-test” calculation. The purpose of the latter is to determine whether the debtor qualifies for Chapter 7 bankruptcy relief. Generally speaking, if the household income of the debtor is above average the debtor may be required to file under Chapter 13 instead of Chapter 7. However the means-test formula is very complex, and in many cases the determination of whether the debtor is qualified for Chapter 7 cannot be made without using a specialized computer program.

Exemptions - Chapter 7 Bankruptcy Florida 

If Florida exemption law applies, the following are the principle bankruptcy exemptions under Florida law. This is property that the debtor can keep and that the Chapter 7 Trustee cannot liquidate or sell to make a payment to the creditors

1. Homestead - Chapter 7 Bankruptcy Florida 

The debtor’s homestead is exempt property under Article X, Section 4 of the Florida Constitution. This protection is afforded homestead properties situated on one-half acre or less within a municipality and properties up to 160 acres outside a municipality. There is no dollar limitation, provided the debtor purchased the residence 40 months or more prior to filing bankruptcy. If the debtor purchased his home within 40 months the new law exempts up to approximately $137,000 of equity.

2. Statutory Exemptions

These include pensions, 401K plans, tax deferred retirement plans, Social Security income, disability income, IRAs, annuities, cash value of life insurance, college investment plans (including 529 Plans), health savings accounts, and hurricane savings accounts.

3. Automobile Exemption:

The debtor is allowed to exempt $1,000 of equity in an automobile. Spouses who jointly own a car may exempt $2,000 of value in that car. If the balance of the debtor’s car loan is greater than the car value (“upside down”) then he has no car equity and his car is protected in bankruptcy so long as you keep your car payments current.

4. Miscellaneous personal property exemption.

Every debtor is allowed to exempt $1,000 ($2,000 for joint filings) of all other personal property including furniture, cloths, tools, and estimated cash on hand. And if the debtor does not have a homestead exemption, a $4,000 "wildcard" personal property exemption applies.

The Chapter 7 Trustee

The court appoints a trustee who oversees the Chapter 7 case and liquidates the debtor's assets in order to pay off the debts. In many cases, however, the debtor's assets are exempt or already subject to valid liens, so there will be no assets to liquidate. Most consumer bankruptcies are "no asset" cases in which there is nothing available for the creditors. The trustee can also try to recover money for the estate under the trustee's "avoiding powers." These powers include the power to set aside preferential transfers to creditors within 90 days of filing; undo security interests and pre-petition transfers that were not properly perfected; and pursue fraudulent conveyance claims under state law. If there are assets, the trustee collects the sale proceeds in a fund from which the debts are paid to the extent possible. Under the Bankruptcy Code, property is distributed according to six classes of claims; each class must be paid in full before creditors in the next lower class are paid anything.

The trustee holds a meeting of creditors between 20 and 40 days after the debtor files the petition. During this meeting, the trustee and creditors may ask the debtor, who is under oath, questions. The debtor must attend the meeting of creditors and answer questions about his or her property and financial matters. When a debtor wants to keep certain secured property (such as a car) after bankruptcy, he or she may choose to reaffirm the debt. In a reaffirmation agreement, the debtor and creditor agree that the debtor will pay all or part of an otherwise dischargeable debt after bankruptcy. The creditor promises that it will not repossess the property as long as the debtor continues to pay the debt. Reaffirmation agreements must be entered into before discharge is entered and they must be signed by the debtor and filed with the court.

The Discharge

When all of the proceeds are distributed, most remaining unpaid debts are discharged, meaning that they no longer exist and the debtor has no further obligation to pay them. Some debts, such as student loans, damages resulting from the debtor's willful or malicious acts, debts incurred by giving false financial information, domestic support obligations, and some debts incurred just prior to filing for bankruptcy, are non-dischargeable. A court may deny a discharge if the debtor failed to keep or produce financial records; failed to satisfactorily explain any loss of assets; committed perjury; failed to follow an order of the court; fraudulently transferred or hid property; or failed to complete the required financial management course.

In addition the debtor may not receive a discharge in a chapter 7 case within 8 years of the filing date of a previous bankruptcy in which de received Chapter 7 discharge, or within 6 years of the filing date of a previous bankruptcy in which de received Chapter 13 discharge.


Because the Bankruptcy Code affords various forms of relief, including liquidation under Chapter 7, you should seek the advice of a lawyer before making any decisions. Attorney John T.Snow can provide you essential advice if you are considering voluntary bankruptcy under Chapter 7.

DISCLAIMER: The information provided is for informational purposes only and should not be construed as legal advice. Seek the advice of an attorney for advice on any legal matter.

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