Chapter 7 Bankruptcy

Chapter 7 bankruptcy is basic, straight bankruptcy. Chapter 7 is also the most common type of personal bankruptcy. People file chapter 7 to get a fresh financial start. It provides very effective relief from credit card debt, medical bills, ordinary civil judgments, personal loans, and other unsecured debts (loans without collateral). In most cases chapter 7 simply eliminates these types of debts. Chapter 7 is also usually a fast process, often being completed in three to four months. Many people who file chapter 7 bankruptcy are able to keep all of their property. People do this by using the property allowances provided by Florida’s statutory and constitutional exemptions, which protect a person’s home (referred to as one’s homestead in the Florida constitution) and protect other personal property such as household goods and one motor vehicle up to a set value. Other exemptions available to residents of Florida include protections for most retirement accounts and protections for a person’s wages in certain circumstances.

However, chapter 7 bankruptcy is also known as “straight liquidation”. If property owned by a debtor in a chapter 7 personal bankruptcy is not exempt, the chapter 7 trustee (the person appointed by the court to administer the case) will sell, or liquidate, the property to pay creditors. Therefore it is not uncommon for people to have to surrender property to the chapter 7 trustee, which is considered part of the bargain for getting a discharge of their debts in return.  Sometimes this is planned, but sometimes people lose property to the chapter 7 trustee unintentionally as a result of poor planning. But many people who own property that is either not exempt or worth more than the amount protected by the exemptions are still able to keep their property in chapter 7. This is done through proper planning before the filing of the bankruptcy and through the negotiation of a “buy-back” agreement with the chapter 7 trustee during the bankruptcy.

For many people, filing for chapter 7 bankruptcy, which is often preferable over chapter 13 because it is much faster and cheaper, depends on being able to keep certain assets such as a valuable motor vehicle that is paid in full. Because this aspect of chapter 7 can be complicated and because of the potential for serious consequences, it is important to have an experienced bankruptcy attorney on your side. Bankruptcy attorney Louis Hernandez negotiated hundreds of chapter 7 cases with the bankruptcy trustees in Miami and Fort Lauderdale during the several years he spent working for high-volume bankruptcy firms and has a familiarity with this process, as well as the entire chapter 7 bankruptcy process, that is invaluable to anyone considering filing a personal bankruptcy under chapter 7 in Miami or greater Fort Lauderdale.