The Law Office of John Vernon Moore, P.A. is here to help with your chapter 7 bankruptcy proceedings.
Bankruptcy is a way for Debtors (individuals who have promised to pay on a line of credit what they owe another entity) to discharge what they owe to their creditors. In other words, you do not have to pay the creditors back, what you owe. Many times, bankruptcy places you in a position to not lose your house to foreclosure, your car from being repossessed, or your possessions from being auctioned to pay off creditors.
During a bankruptcy, you are required to list all the creditors that are seeking to collect from you and your estate. This is to ensure that the creditors are all given a fair chance to collect what they deserve. Many of the debts cannot be paid back, and those creditors will not receive their portion, this amount is what is discharged through the bankruptcy courts. If you fail to list all of the creditors that are owed, the creditor that was not filed in the bankruptcy may collect all of what they are owed.
A person who is discharged in bankruptcy is relieved from liability from most that are incurred before the bankruptcy, and are in turn, protected from future collections of those debts. The purpose of going through a bankruptcy is to give an individual a fresh start on life, and be able to rebuild their life.
What is Chapter 7 Bankruptcy?
This is often referred to as a liquidation bankruptcy and can be used by both individuals and businesses. The Debtor (the individual who has promised to pay its debts) is required to turn over all non-exempt property to a trustee, who then sells said assets, and the proceeds can be divided among the creditors (collectors). In Florida, certain exemptions may let an individual keep up to a statutory amount of equity in items. These items include, but are not limited to, equity in the Debtor’s house, car, jewelry, tools used for work, among other things. The amount of equity retained with these items is updated every three years, and it is best for a Debtor to sit down with an experience attorney and discuss options. Once completed, the Debtor can move forward without having to repay debts discharged through the bankruptcy.
Will I Lose Everything If I File?
A person who files for bankruptcy may exempt certain items from the bankruptcy. In some cases, this lets you keep your home, your car, your furniture, your household items, your retirement, what you get to keep varies from case to case. Different states have different allowances for exemptions. You also can keep assets that have no equity, such as a car that’s worth less than is owed on it, or a house where the mortgage is higher than the property value. It is suggested that you consult an attorney to find out exactly which items you may be able to keep after filing for a bankruptcy.
What’s Involved in Filing for Bankruptcy?
A bankruptcy is started by filing a Petition with the U.S. Bankruptcy Court. The requirements for the petitions vary depending on the Chapter under which the bankruptcy is filed, but involve detailed forms and schedules which are not available at the Bankruptcy Court. A typical bankruptcy package could involve up to 50 pages of verbiage that needs to provide to the court, and can be overwhelming without the help of an experienced bankruptcy attorney to navigate.
Can All My Debts Be Wiped Out?
Not all debt can be discharged during a bankruptcy. The debts that cannot be discharged for bankruptcy are student loans, federal taxes, child support, and alimony. Federal taxes do have some exemptions, and it is suggested that consult an attorney or CPA for information on how to navigate discharging or negotiating owed federal taxes. Student loans could be discharged, but must require the Debtor (the individual who owes on a student loan) to be undergoing “undue hardship.” While not all debt is cleared from bankruptcy, it is important to note that clearing other creditors from you, clears up money to pay these obligations owed.
What happens when I file for Bankruptcy?
When a Debtor (individual who has promised to pay on a debt) files a petition with the courts to start with the proceedings, the Court will issue and stay. This means legal proceeding against the Debtor will stop. Creditors/collectors will stop calling, writing, filing, or pursuing Debtors about garnishments, repossessions, and foreclosures.
Are there different classes of creditors?
There are, in general, three types of creditors, and can be broken down into priority, secured, and unsecured creditors. Priority creditors are given priority over other creditors to be paid back first, the creditors that fall in this class are the IRS, child support recipients, and those individuals who are owed alimony. Secured creditors are given the second priority in how the money is distributed to creditors; these include creditors who own a stake in the Debtor’s property. Secured creditors usually hold liens against real property, and vehicles in order to get their money back, this means that when the Debtor sells the property, they must pay the creditor with the proceeds of the sale. The last creditor to be paid are those who own unsecured debt. Creditors who have unsecured debt are credit card debts, bank loans, peer to peer lenders, doctor’s bills, and some. Most time, there is not enough money to pay back the unsecured debt. Sometimes, you may be able to discharge leases for apartments, cars, or equipment.
Can I keep my house and or car?
Keeping your house and car after a bankruptcy is possible, and will be considered during your proceedings. Possession of your house can be made easier if you continued to make payments and did not fall behind in those payments. If you have fallen behind in your payments, you may still be able to keep you home, and the payments that have been missed will be tacked on to the end of your loan. While filing for bankruptcy, you should be prepared to start your payments over on your house, this is akin to refinancing your house. As far as keeping your automobile, if you owe more on the vehicle than it is worth, you may continue to pay the payments, or may ask the bank who owns your title to adjust the total financed amount to the fair market value. In either case, you should consult the Law Office of John Vernon Moore, P.A. to find out your options on how to keep you home during a chapter 7 bankruptcy.
How long should I expect a chapter 7 bankruptcy proceeding to take?
Chapter 7 bankruptcy may be over quicker than you think. Most are done within 120 days of filing. Some complications may extend this time, but you should expect this difficult portion of your life to be over in under 4 months!