Chapter 7 Bankruptcy

Often referred to as a "fresh start", Chapter 7 bankruptcy could be the financial relief tool to help you. The reason is most (but not all) unsecured debts are discharged (i.e. eliminated) such as
credit card debt,
utility bills,
medical bills,
payday loans.

Chapter 7 bankruptcy comes from the United States Bankruptcy Code and this determines the qualifications for who can file a Chapter 7 bankruptcy. They are:
No prior bankruptcy in the past 6-8 years (depending on the type of bankruptcy previously filed)
Pass the means test

Learn more about Chapter 7 Bankruptcy including the advantages and disadvantages.
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CHAPTER 7 PROCESS & FEES

Step 1: Let's Talk!
We get to know you and it's the start to getting your life back! (30-60 min. meeting)
FREE, no obligation
Video, phone or in person meeting

Step 2: Review & Sign Papers
A Two-hour meeting
No worksheets
We pull your credit report for you

Step 3: 341 Meeting
This takes place about six weeks after filing
Less than 30 minutes
Verify information on schedule is correct

Step 4: Discharge

Approximately 60 days after your 341 meeting

Credit cards, car loans, my house

Can I use my credit cards? It is best not to once you know you are going to file bankruptcy. If you have to use your credit cards you should only charge necessities, (must have items) especially within 90 days of your Chapter 7 filing date.

Can I keep my car? Maybe. If you are underwater (owe more than your car is worth) and you are current on your loan payments you will need to reaffirm your car loan. If your equity exceeds the state exemption limit then the Trustee may sell your vehicle to repay creditors. My advice is to remember your are filing to get a clean start and it is "just a car." Once you get to the other side you can buy a different car with lower payments or maybe a used car with no payments at all. The goal is freedom from debt.

What happens to my House? If you are current on your payments and do not have too much equity you can probably keep your house. If there is significant equity that can be used to pay creditors then the Trustee may want to sell the house. However, Florida has a homestead exemption to protect your home from creditors so in Florida it is likely you will keep your house. FLORIDA: You can exempt an unlimited amount of equity in your home or other property covered by the homestead exemption as long as the property isn’t larger than half an acre in a municipality or 160 acres elsewhere. You must have owned the property for at least 1,215 days before the bankruptcy filing. (Fla. Stat. Ann. § 222.01-02)

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The Bankruptcy Means Test

The means test has two parts to determine if you have income you could put toward paying off debt. The test is for those who have primarily consumer debts, like credit card or medical debt. If you are dealing with business debt then you do not need to pass the means test. Even for Chapter 13 bankruptcy the test is used to guide the the repayment schedule.

Step 1
The first part of the means test checks whether your household income is below your state’s median income.

Step 2
Gather your expenses over the past six months: rent, groceries, clothing and medical costs make up what are called “allowable expenses.”