Jacksonville Chapter 7 Bankruptcy Attorney
Solutions for Florida Residents Facing Consumer Debt
Chapter 7 bankruptcy is the most common form of bankruptcy filed by individuals in the U.S. Each year, around 480,000 individuals file for Chapter 7 bankruptcy. Chapter 7 allows individual debtors to have all of their qualifying debts, including credit card debt, medical bills, and others, completely wiped away, allowing them to work towards a fresh start and a brighter financial future. In most cases, Chapter 7 has the potential to completely wipe out most, if not all, of the filer’s debts. If you would like to pursue this type of bankruptcy, speak with the qualified and compassionate Jacksonville Chapter 7 bankruptcy lawyers at the Albaugh Law Firm.
What Is Chapter 7 Bankruptcy?
Chapter 7 bankruptcy involves compiling all qualifying debt into a single action, collecting and selling non-exempt assets to pay off as much of the combined debt as possible, and discharging any remaining debt. The process is overseen by a bankruptcy trustee who is appointed by the bankruptcy court. As we discuss below, exemptions under the state and federal bankruptcy laws allow many debtors to protect most or all of their assets from sale, while still granting debtors the relief provided by debt discharge.
Chapter 7 is often the fastest and easiest choice of bankruptcy debt relief for individuals struggling with consumer debt. Filing for Chapter 7 can be a great starting point for getting out from under crippling debt, rebuilding credit, and moving toward a new financial future. Not everyone is eligible for Chapter 7, and not all debt is dischargeable, which is why it is crucial to retain an experienced and capable Jacksonville bankruptcy attorney to help you through the process.
Which Debts Are Discharged in Chapter 7?
Chapter 7 allows debtors to discharge most unsecured debts, meaning debts that are not attached to any sort of collateral. Typical dischargeable debts include medical bills, credit card bills, and personal loans. At the conclusion of a Chapter 7 proceeding, any outstanding amounts due on these covered debts will be wiped clean, preventing covered creditors from ever seeking repayment.
Certain types of debts cannot be discharged in a Chapter 7 bankruptcy. These include:
- Fraudulent debts
- Certain taxes
- Child support
- Certain debts incurred within 60 days of filing for bankruptcy
- Debts from criminal activity, fraud, or malicious harm caused to others
Student loans can sometimes be discharged in Chapter 7, depending on the circumstances of the debtor. Federal bankruptcy rules concerning student loans have been changing in recent years, as the administration under President Obama sought to make the discharge of student loans easier for U.S. borrowers.
If you are considering Chapter 7 bankruptcy and are unsure whether your debts are dischargeable, speak with one of the knowledgeable Florida bankruptcy attorneys at Albaugh Law Firm.
We Help Determine Your Chapter 7 Eligibility With the Bankruptcy Means Test
To be eligible for Chapter 7 bankruptcy, the debtor must satisfy what is known as the “means test.” The bankruptcy means test evaluates a debtor’s income compared to the official median income for households in the state of Florida. If your current monthly income (CMI) is lower than the median income for the state, you typically qualify for Chapter 7 relief automatically.
If your CMI is higher than the median income in the state, the means test will apply a complex expense formula to determine whether you are eligible to file under Chapter 7. The formula involves comparing income to various household and other expenses, such as rent, car payments, and medical bills. The experienced bankruptcy attorneys at Albaugh Law Firm will walk you through the means test to determine your Chapter 7 eligibility. If you do not satisfy the means test, you might still be eligible to file for Chapter 13 bankruptcy.
Chapter 7 Bankruptcy Exemptions
Many people assume that they will lose all of their assets when they file for Chapter 7 bankruptcy. This is a common misconception. Under the Bankruptcy Code, debtors can keep certain assets from creditors and the trustee. The property that debtors choose to keep is known as “exempt property.” In practice, many debtors can keep most, if not all, of their property exempt from the bankruptcy proceedings.
Debtors can choose from a set of exemptions provided by either Florida or federal law, depending on the type of property they wish to exempt. The seasoned Jacksonville bankruptcy attorneys at Albaugh Law will walk you through the exemptions available under each set of rules and determine which set will best suit your needs and protect the biggest portion of the property you care about.
Federal & State Exemptions
Congress has made a set of exemptions in the bankruptcy code, though each state can choose to opt-out of such exemptions in favor of state law exemptions instead. Sixteen states allow debtors to choose between federal and state exemptions. The other 34 states require the use of their own exemptions. To use exemptions provided by the state, you will need to have lived in that state for at least two years before filing for bankruptcy. If you haven’t lived in the state for two years, you will have to use the exemptions for the state that you lived in six months prior to the two-year lookback period.
Bankruptcy exemptions are intended to allow you to have the necessary means to live and work. Exemptions protect debtors from aggressive creditors who would like to seize every asset and leave the debtor destitute. Although each state has its own exemption rules, the following are usually offered by most states:
- Wage Exemption
- Homestead Exemption
- Auto Exemption
- Household Goods Exemption
- Wild Card Exemption
Common excluded property under exemptions includes:
- Pension Rights & 401(k) Plans
- IRAs (Up to $1 Million)
- Social Security Benefits
- Unemployment Benefits
- Disability Benefits
- Veterans Benefits
- Alimony or Support Payments
- Personal Injury Damages Award
Liens & Bankruptcy Exemptions
It’s important to note that exemption amounts only apply to your equity in an asset. If you co-own assets, only your share of the equity will be relevant to the exemption. If an asset is subject to a mortgage or a lien, your equity will be the value of the item after the amount of the lien or liens has been deducted.
In general, the bankruptcy trustee won’t sell an asset if you have slightly more equity than the exempt amount. A trustee will only sell your assets if you have enough non-exempt equity to make a substantial payment to creditors.
Exempt Property Is Left Alone
As long as no objections are filed to the exemptions, they will become final after the meeting with creditors. This meeting is commonly referred to as the “341 meeting.” Exempt property is not considered the property of the bankruptcy estate, and you are allowed to keep it after the bankruptcy case closes.
Is Chapter 7 Bankruptcy Right for You?
If you are eligible for Chapter 7, you will have to decide whether it is the best option for your circumstances. This decision requires a strong understanding of the bankruptcy laws in Florida, including the applicable exemptions and the types of debts that are covered. Each form of bankruptcy has its advantages and disadvantages, and the right path forward may be different for each debtor. Give us a call to discuss your circumstances and your options to find out whether Chapter 7 bankruptcy is the best option for you to obtain financial relief.
Call a Chapter 7 Lawyer in Jacksonville Today
If you are considering bankruptcy to start building your new financial future, we are here to offer the experienced help you need. Our goal is to get our clients the financial freedom that they deserve. Contact Albaugh Law Firm today for a free consultation with a skilled Jacksonville bankruptcy lawyer by calling 904-471-3434.