During times of financial strain, it’s common to feel overwhelmed. Financial difficulties can occur for a variety of reasons. Oftentimes, debt plays a role in this strain. When you can’t make your monthly payments on time, you may enter a period of default where your dues can be forwarded to a collection agency. When this happens, your belongings can be taken from you, wages might be garnished, and tax refunds can be used to pay your remaining debt. Unfortunately, there’s no easy way to lessen these consequences if you don’t have the money to pay off what you owe. When this happens, bankruptcy might be a viable option. There are many different types of bankruptcies that you can file, but they don’t all offer the same solutions. One of the most common bankruptcy choices is called a Chapter 7 bankruptcy. Call us today to set up a free consultation with our Florida foreclosure defense lawyers.
What is Chapter 7 Bankruptcy?
Chapter 7 bankruptcy is one of the simplest and easiest forms of bankruptcy that you can file for. It is also known as a liquidation bankruptcy due to how the borrower’s debts are eliminated. Essentially, through a Chapter 7 bankruptcy, a court officially appoints a trustee, or a person with legal authority, who obtains your assets. When your assets are taken, the trustee sells them and distributes the money made to the appropriate creditors. Thus, this form of bankruptcy eliminates debts through liquidation. It’s important to know that not all of your assets can be liquidated. You are typically allowed “exemptions” so you will have a way to rebuild your life. Some common exemptions include a vehicle, some retirement accounts, your residence, and any property required to make a living.
Who Can File?
The process for filing starts with a petition. Not everybody can file for a Chapter 7 bankruptcy. In fact, eligibility is traditionally determined by something called the means test. The means test was introduced to the bankruptcy code in 2005 and work by comparing the average income of the debtor within the last six months to the median income for equal-sized households in the state that the debtor lives in. Any equal to or less than the result is passing for a Chapter 7 bankruptcy. Alternatively, the means test isn’t required if your debt is greater than 50 percent of your business or tax debt. Thus, if you have larger debt or lower income than those in your state, you could qualify for Chapter 7 bankruptcy.
How to File
If you believe you may qualify for Chapter 7 bankruptcy, there is a specific process that you can follow to file for it. First, it’s best to reach out to an attorney to walk you through bankruptcy. It is not a simple step process and often requires advising. Your attorney will help you file your initial petition as well as your statement of financial affairs. These forms ask you questions about your recent financial history and list all of your debts and assets. It’s important that you list every creditor, associated schedules, and mailing addresses per each. Additionally, this involves requesting your desired exemptions. As soon as your petition is filed, you’ll have an automatic stay of debt which prohibits creditors from pursuing further collection actions.
Alternatives
Chapter 7 bankruptcy isn’t always the best choice for everyone. First, if you can pay as agreed, this is the best option to avoid further negative credit impact. If you can’t afford your debts, requesting a settlement could be beneficial for you. This involves adjusting the terms of your loans to pay them less than your total balance, yet this is best for those that don’t have many individual lenders. Lastly, there are other bankruptcy options including Chapter 11 and Chapter 13 bankruptcies.
File For Bankruptcy Today
If you believe that filing for Chapter 7 bankruptcy is the best choice for you, or if you’d like to learn more about alternatives to bankruptcy, the experienced attorneys at the Foreclosure Defense Group can help you. Call us today to schedule an appointment to discuss how we can best help you!