Chapter 7 Bankruptcy

“Straight bankruptcy” is the common name for the process under chapter 7 of § 11 of the U.S. Code, also known as the “Bankruptcy Code.” In a chapter 7 case, a bankruptcy lawyer files a petition to have the court discharge your debts. This petition must contain a number of detailed attachments, including: a “creditor matrix” (a complete list of all creditors and their addresses), a certificate showing completion of a credit counseling briefing within 180 days before filing, a statement of financial affairs, and detailed “schedules” that separately show all real property, personal property, secured and unsecured claims, and all “executory” contracts and leases. You are also required to provide statements that show your current monthly income along with a number of other forms, notices, and documents.

The fundamental purpose of chapter 7 bankruptcy is to eliminate or discharge your debts in exchange for giving up property that is not “exempt” from the bankruptcy “estate.” Under certain circumstances, all of your property will be protected. But any property that is not “exempt” or protected will be sold by the bankruptcy trustee. The money from the sale of that non-exempt property goes to pay unsecured creditors. The proceeds first go to pay off “priority” debts and any remaining funds are applied to unsecured, un-prioritized debts. Regardless of how much money is received from the sale of non-exempt property, any remaining unpaid and unsecured debts will be discharged at the conclusion of a chapter 7 case.

How much money you make has a big impact on a chapter 7 bankruptcy case. In most situations, if you make less than Florida’s median family income for a family of your size, you will automatically have the right to a discharge of your unsecured debts under chapter 7. Even if your income is greater than the state median, it is still possible to qualify for a chapter 7 bankruptcy if you pass a “means test.” You must fill out a detailed form that asks information about your income and expenses. There are standards in the Bankruptcy Code, and if the results of the means test show that your “disposable income” is below a certain level or percentage of your non-priority, unsecured debt, then you can still obtain a chapter 7 discharge. To find out more about the median income levels, please view this link:

https://www.justice.gov/ust/eo/bapcpa/20181101/bci_data/median_income_table.htm.

Chapter 13 bankruptcy might be a better option if you have a steady income and want to keep certain property that is not protected in a chapter 7. For more information on bankruptcy or how we can help you with all of the above and more, please call us today at (754) 400-5150 or contact us online. Let the lawyers and staff at the Law Offices of Evan M. Rosen serve you!