FLORIDA CHAPTER 7 BANKRUPTCY INFORMATION

In a Chapter 7 bankruptcy you wipe out most of your debts. Chapter 7 bankruptcy is a liquidation where the trustee examines all your assets and income to determine your eligibility of a Chapter 7 Bankruptcy and if there are any un-exempt assets. All debts, assets and income must be listed but this does not mean you will lose it. Certain assets are 100% exempt (“protected”) within your Chapter 7 Bankruptcy other assets have specific exemptions used to protect those, which our experienced staff can review with you at your FREE consultation.

Certain debts cannot be discharged in a Chapter 7 bankruptcy, such as alimony, back child support, fraudulent debts, certain taxes, student loans, and certain items charged (see below for a list of non-dischargeable debts). In most Chapter 7 cases, the debtor has large credit card debt and other unsecured bills and very few assets. In the vast majority of cases a Chapter 7 bankruptcy is able to completely eliminate all of these debts.

You may keep certain secured debts such as your car or your home by continue to pay (“reaffirming”) those debts. To do so, you must sign a “Reaffirmation Agreement” with your lender. If you decide that you want to keep your house or your car, and you reaffirm the debt, you will still be liable and this debt is not dischargeable in your current bankruptcy. You will still owe that debt and you must continue to pay it just as you were obligated to continue to pay it before you filed bankruptcy. In order to reaffirm the debt, you must also bring it current. In other words, if you are three or four months behind, then you must pay the back payments which are due in order to reaffirm it. You may also choose to discharge secured debts but you would have to return the collateral back to the lender (i.e. your home or car) then these debts would be discharged.

FLORIDA BANKRUPTCY EXEMPTIONS

The Florida bankruptcy exemptions are very detailed and please note each state is different on the allowable exemptions. The property you can exempt or protect from creditors when you file bankruptcy is one of the things our team will advise you on when you have your FREE consultation. You will be able to kept this exempted property after you file bankruptcy.

Example of how exemptions are used and applied. An exemption limit applies to any equity you have in the property. Equity is the difference between the value of the property and what is owed on the property. For example, a car valued at $5000 with a loan of $4500 has an equity value of only $500. If the property is secured by a loan, such as a car or home, and you are current on the payments and the equity is covered by your exemptions, you may elect to keep making payments on the loan and keep this property through the bankruptcy.

FLORIDA NON-DISCHARGEABLE DEBTS

The following debts cannot be discharged in Chapter 7 Florida bankruptcies. If you file for Chapter 7, you will still be responsible for repaying these debts after your discharge. Remember that you will also have to continue to pay secured debts (such as a house or car payment) if you to intend to keep the secured property.

1. Back child support, alimony obligations and other debts dedicated to family support.

2. Debts for personal injury or death caused by driving while intoxicated.

3. Student loans, unless it would be an undue hardship for you to repay.

4. Fines and penalties for violating the law, including traffic tickets and criminal restitution.

5. Recent income tax debts (within 3 years) and all other tax debts.

6. Debts you forget to list in your bankruptcy papers, unless the creditor learns of your

bankruptcy case.

The following debts may be declared non-dischargeable by a bankruptcy judge in Chapter 7 if the creditor challenges your request to discharge them. Please note if a creditor disputes a debt this is out of the normal scope of our Chapter 7 retainers and would be additional fee’s to litigate.

1. Debts you incurred on the basis of fraud.

2. Credit purchases of $1,150 or more for luxury goods or services made within 90 days of

filing.

3. Loans or cash advances of $1,150 or more taken within 90 days of filing.

4. Debts from willful or malicious injury to another person or another person’s property.

5. Debts from embezzlement, larceny or breach of trust.

6. Debts you owe under a divorce decree or settlement unless after bankruptcy you would still

not be able to afford to pay them or the benefit you’d receive by the discharge outweighs

any detriment to your ex-spouse (who would have to pay them if you discharge them in

bankruptcy).

FLORIDA BANKRUPTCY PROCESS – HOW TO FILE BANKRUPTCY IN FLORIDA

2005 Bankruptcy Act Credit Counseling The 2005 Bankruptcy Act requires all individual debtors who file bankruptcy on or after October 17, 2005, to undergo credit counseling within six months before filing for bankruptcy relief and to complete a financial management instructional course after filing bankruptcy, these are explained below and our office will provide you the contact for an approved/accredited counseling service. The counseling service may be done in person, by phone or internet at your convenience and is good up to 180 days prior to filing.

FLORIDA PRE-BANKRUPTCY (1 st Course) CREDIT COUNSELING

Before you file for bankruptcy you need to take a credit counseling course that has been approved for Florida bankruptcy court.

The purpose of this course is to determine you qualify for a Chapter 7 and if this is the right route for you. Once you complete the course you will receive a certificate that our office will file along with your bankruptcy petition.

You are not required to take the Florida credit counseling if you are on active military duty in a combat zone or you are physically or mental impaired to such an extent that you cannot fulfill the credit counseling requirement.

FLORIDA PRE-DISCHARGE (2 nd Course) DEBTOR EDUCATION COURSE

After you file bankruptcy, you are required to take a debtor education class. This class is necessary to receive a discharge of your debts. Once you complete the course you will receive a debtor education certificate.

The purpose of the debtor education class is to teach you how to budget your income and responsibly manage your finances after you complete the bankruptcy process.

Both the Pre-Bankruptcy & Pre-Discharge courses do have fees associated with them and usually range from $10 – $25, we try and find the least expensive approved course for our clients.

FLORIDA BANKRUPTCY MEANS TEST

2005 Bankruptcy Act Means Test Under the 2005 Bankruptcy Act your income and expenses will be analyzed to determine if you qualify to file a Chapter 7 or if you must file Chapter 13. To determine your eligibility for a Chapter 7, the courts will look at the your average income for the 6 months prior to filing and compare it to the median income for Florida. If the income is below the median, then you may be eligible for a Chapter 7. If your income exceeds the median, the remaining parts of the meanstest will be applied to determine if you can file Chapter 7 or if you must file under Chapter 13.

If you would like to file a Chapter 7 bankruptcy you must pass the Florida means test. The test only applies to higher income filers which means that if your income is below the Florida median for your household size you are exempt from the test and may file a Chapter 7.

If your income is higher than the Florida median you will need to complete the means test calculation to determine if you can pay back a portion of your unsecured debts through a Chapter 13 bankruptcy.

Means Test Exemptions

If your debts are not primarily consumer debts then you are exempt from the means test. You are also exempt from the means test if you are a disabled veteran and incurred your debt primarily during active duty or performing a homeland defense activity.

Florida Median Income

If your currently monthly household income is less than the Florida median income for a household of your size there is a presumption that you pass the means test and are eligible to file a Chapter 7 bankruptcy.

Your average household income is determined by averaging your monthly income over the last six calendar months. If you are over the median income limit and your income has declined over the last six months, then waiting one or more months might bring your income under the median level for Florida. Once you determine your average monthly income you multiply that by 12 to determine your annual income for the purpose of Florida median income test.

The median income averages are set by the Census Bureau and the Internal Revenue Service and is always changing due to the fluctuating of average income and household sizes. Our office can determine whether you are eligible to file a Chapter 7 under the median income guidelines at your FREE consultation.

Cost of Filing a Chapter 7 Bankruptcy

The court cost for filing a Chapter 7 bankruptcy is $335. This fee may be waived in extenuating circumstances and if not approved but the Court you may be able to pay it in installments. Our firm fees are determined at your FREE consultation. All fees due to the firm must be paid in full prior to your Bankruptcy being filed. This is due to the automatic stay that goes into effect once your bankruptcy petition is filed. The automatic stay is in effect immediately following the filing of your petition and barres all creditors from collecting against you unless given relief by the Court. If a Bankruptcy attorney files your case and is still owed fees we are unable to collect. Our office also requires a creditor report to pulled by our office and the fee for that service is $30(individual) and $50 (joint).

Please call today at 321-775- 3694 for your FREE consultation in our Indialantic office or send us a message and we will respond immediately  Our office is ready to help you through this difficult time and understands the emotional aspects this can take on many suffering in these tough economic times. We appreciate the opportunity to discuss your options with you in person or over the phone.

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