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Is Chapter 7 Bankruptcy Right for Me?


How Bankruptcy Saved My Family And How It May Save Yours

Chapter 7 bankruptcy is evidence of financial trouble, but it isn’t entirely bad as it helps individuals wipe out some of their debts. However, filing for Chapter 7 should be a thoughtful process – you’ll want to ensure it makes financial sense before you can begin. Even where individuals are eligible to file for Chapter 7 bankruptcy, it may not always be the right step to take. The following questions would help determine whether Chapter 7 bankruptcy is right for you:

  • How much of your debt will Chapter 7 bankruptcy discharge?
  • Will you have to surrender the property that you wish to keep?
  • Are you legally protected from creditors’ collection activities even if you don’t file for Chapter 7 bankruptcy?

The answers to these questions will help you determine whether Chapter 7 bankruptcy is right for you. Besides answering these questions, the following factors will help determine whether Chapter 7 bankruptcy is right for you and whether it is worthwhile:

Keep Your Personal Property

While you can lose assets in Chapter 7 bankruptcy, there is a good chance of keeping most of your personal property. Save for luxury items, most of your property will be protected under the Florida personal property exemption.


Valuable Property and Wages

Before creditors can go ahead and collect from you, they’ll first determine whether you have assets. If you don’t have a regular income and assets, apart from a modest car and house furnishings, you are deemed to be judgment proof. That means that your debts won’t be paid off even if your property was collected. In such cases, creditors will not collect from you, and filing for Chapter 7 bankruptcy may not be necessary


The same applies if all your income comes from Social Security, and all your property is exempt under the Florida bankruptcy laws. Individuals who own valuable assets can expect creditors to collect some of it for debt repayment. Florida laws may allow creditors special collection rights, and individuals may have to liquidate some of their property to pay tax debts, student loans, and child support.

Unsecured creditors like those with utility balances, medical debts, and credit card balances need to sue you in court to obtain a judgment before they can begin collection procedures. For such creditors, common collection procedures would include seizure of personal property and wage garnishment.

It is important that you consult a Florida bankruptcy attorney once you’re served with a lawsuit by your creditor. Whenever the creditor receives a judgment before you file for Chapter 7 bankruptcy, liens will be placed on your property. It is important to note that liens don’t always go away in Chapter 7 bankruptcy, and your creditor gains a permanent right to your property. However, filing for Chapter 7 may still offer much-needed relief even if a judgment has already been made against you.

Debt Discharge

When filing for Chapter 7 bankruptcy, it is also important to note that some debts are non-dischargeable. It follows that filing for Chapter 7 bankruptcy wouldn’t be right for you if your main aim is to eliminate such debts. Some non-dischargeable debts in Chapter 7 bankruptcy include:

  • Student loans, with the exception that repayment would lead to extreme hardship
  • Alimony obligations and child support
  • Tax debts, especially most income taxes
  • Damages in personal injury or wrongful death cases arising from your intoxicated driving

Some debts can also be non-dischargeable, depending on the bankruptcy judge’s ruling upon a creditor’s objection. Such debts may include:

  • Debts incurred by fraudulent acts, like writing a bad check or providing false information when applying for credit
  • Debts from theft, embezzlement, or breach of trust
  • Debts from malicious or deliberate injury to another party or damage to their property
  • Debts arising from a divorce decree or marital settlement agreement that aren’t automatically non-dischargeable, like alimony and child support

If most of your debts will potentially be objected to being discharged by your creditors, it wouldn’t be right to file for Chapter 7 bankruptcy without talking to a Florida bankruptcy lawyer.

Exempt and Non-Exempt Property

The question of whether to file for Chapter 7 bankruptcy will also depend on how much property will potentially end up in the hands of your creditors (non-exempt property) and how much you get to keep (exempt property). In Florida, you can keep the following property in Chapter 7 bankruptcy:

  • Homestead up to 1/2 acre in a city and 160 acres in the county
  • Up to $1,000 in motor vehicle equity
  • Personal property up to $1,000
  • Social security
  • Head of household wages
  • Retirement accounts, including 410(k), Roth IRA, IRA
  • Annuities and insurance policy proceeds

Any other property that isn’t protected under the Florida bankruptcy exemptions is subject to creditor collection.

Generally, Chapter 7 bankruptcy is right for individuals who:

  • Have few assets
  • Have medical bills, personal loans, and credit card balances as the majority of their debt
  • Wages don’t exceed the Florida median income for the same household size.

Advantages of Chapter 7 Bankruptcy

After careful consideration and consulting with a Florida bankruptcy attorney, individuals eligible for Chapter 7 may enjoy various benefits by filing. Some of the advantages of wiping out debt by filing for Chapter 7 bankruptcy in Florida include:

Relatively Quick Process

In Florida, Chapter 7 bankruptcy cases take about 90-120 days after filing. Once your bankruptcy case is closed, most of your unsecured debt will be discharged, and creditors can no longer pursue legal action.

No Payment Plan

In Chapter 7 bankruptcy, you won’t have to devise a repayment plan as the process involves liquidating non-exempt property and paying off creditors. The court will discharge any outstanding unsecured debt, and you get a fresh start to your financial life.

Debt Discharge

Eligible individuals who file for Chapter 7 bankruptcy in Florida will emerge from the process debt-free. This is the case, especially if theirs is mostly unsecured debt. However, non-dischargeable debts such as unpaid alimony, student loans, and tax debts won’t be wiped out.

Keep Your Home and Car

In some Chapter 7 bankruptcy cases, a Florida filer may keep their home and car. Thanks to the Florida homestead exemption, you can keep your home even in bankruptcy, provided you have equity. Similarly, individuals with a modest car get to keep it even in Chapter 7 bankruptcy.

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