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Chapter 7 Bankruptcy Allows For Discharge Of Overwhelming Debt

When people envision how personal bankruptcy works, most are thinking of Chapter 7. Also called liquidation bankruptcy, Chapter 7 allows individuals or couples to discharge most unsecured debt, meaning that the debts are forgiven and do not need to be paid back. In exchange, the debtor may need to forfeit some personal property so that it can be liquidated and used to partially repay debts.

Chapter 7 isn’t right for everyone, and many people with debt issues will not qualify. If you do qualify, however, Chapter 7 bankruptcy can be a powerful solution to allow you to get out from under the weight of overwhelming debt. The best way to understand your legal options and other considerations is to speak to an experienced attorney. In the Tampa area, the firm to contact is the Law Office of Christopher G. Frey, Esq. I bring more than 35 years of legal experience to each case, and I give each client the personalized attention and dedicated advocacy they deserve.

An Overview Of Filing For Chapter 7 Bankruptcy

Filing for Chapter 7 bankruptcy is a serious matter, and it can affect many areas of your life. It’s important to understand all the details before filing. The bankruptcy court will subject you to a “means test” in order to assess your income and determine if it’s more than the current median income in Florida. If your income is higher than the median, you may be ineligible to file. Instead, you would have the option of filing for Chapter 13 bankruptcy.

Assuming you are eligible, you would first file a petition for relief, in which you must list all of your debts, assets, and liabilities. Once the petition is filed, the Court issues what’s known as an “automatic stay,” which immediately halts all collection activities against you and nearly all communications from creditors. This is only a temporary measure, but it allows most debtors the chance to focus on resolving their debts through the bankruptcy process.

Your bankruptcy process will be overseen by a court-appointed trustee. The trustee can sell some of your property (if approved by the Court). More on this below. After the Court grants your petition, all unsecured debts will be discharged, and you can begin to rebuild your credit rating.

Some Property Is Exempt From Liquidation

You may be concerned that filing for Chapter 7 bankruptcy will mean that you’ll lose your property. This is not always the case. Exemptions from Chapter 7 bankruptcy allow debtors to keep more of their property than they would otherwise be able to keep. These laws are designed to help protect both individuals and property in bankruptcy. For example, stock portfolios and other investments are typically exempt. Some types of pensions and 401(k)s may not be included in your bankruptcy estate.

Exemptions from Chapter 7 bankruptcy can protect your home and property. For example, if you have a mortgage of $275,000 and your home is worth $300,000, your exemption will cover up to $25,000. If your mortgage is “underwater,” you likely will not be able to keep your home. In this situation, your exemption will cover the equity, and the trustee will sell the rest to pay off your creditors.

Each case is unique, but many debtors are surprised at how much of their property they are able to keep. This is something you can discuss with me during your initial consultation.

Bankruptcy Fees And Expenses

There are several factors that can affect how much your bankruptcy will cost. These factors include the complexity of your case, your location, and the attorney you hire. While most bankruptcy attorneys charge a flat rate, some larger firms offer lower fees because they use paralegals to prepare the paperwork. Another factor is the possibility of a creditor challenging your discharge. Although this only occurs in about five percent of cases, it is still a possibility and could increase the overall cost of your case.

The fees for filing a bankruptcy case can include costs for filing the bankruptcy documents and notifying creditors, fees for amendments, and travel to the Meeting of Creditors. If you can’t afford to pay an attorney’s fees, you may be eligible for a fee waiver.

The Chapter 7 Timeframe Is Often Very Quick

A time frame for Chapter 7 bankruptcy depends on several factors. A simple “no assets” bankruptcy case can take several weeks to complete, but a more complicated case can take up to four or six months. Filing late or going slowly can extend this timeframe.

Once you have filed for Chapter 7 bankruptcy, the trustee will begin the process of collecting payments from your creditors. Your bankruptcy attorney will keep you informed of the progress. Once the creditors submit proof of their claims, the bankruptcy is final.

Is Chapter 7 Right For You? Discuss Your Case In A Free Consultation.

Based in Tampa, the Law Office of Christopher G. Frey, Esq., serves clients throughout the surrounding areas of Florida. For a free evaluation of your debt-relief options, contact my office today to set up an initial consultation. Just call 813-322-2419 or reach out online.

This is a debt relief agency. I help people file for bankruptcy relief under the Bankruptcy Code.