In July, I wrote a blog discussing the basics of
bankruptcy and offered some insight into the world of Chapter 7 bankruptcy.
This week, I am going to go deeper into the nitty gritty of Chapter 7
bankruptcy and what it can mean for your claim.
A
quick refresher. Chapter 7 bankruptcy is the most common and shortest type of
bankruptcy that you can file. After filing, your case will be appointed a trustee
who will oversee your case.
An
often overlooked, but incredibly important, aspect of Chapter 7 bankruptcy are
the exemptions involved. There are some specific things to keep in mind when
filing Chapter 7 bankruptcy in Florida:
-
Most homestead property are exempt, with a
few exceptions.
o
If not claiming the homestead exemption
then the personal property exemption is $4000.00, per debtor, if claiming it is
$1000 per debtor.
-
There is an additional small exemption for
vehicles.
-
Florida has many personal property
exemptions. To name a few:
o
Personal
property can include items like furniture, art, and electronics.
o
Education savings, health savings, and
hurricane savings. (Fla. Stat. Ann. § 222.22)
o
Prepaid medical savings account and health
savings account deposits
-
Florida also has many pension exemptions:
o
Tax-exempt retirement accounts, including
401(K)s, 403(b)s, profit-sharing and money purchase plans, SEP and SIMPLE IRAs,
and defined benefit plans and traditional and Roth IRAs. These are fully exempt.
o
Teachers' retirement benefits.
o
State and County officers and employees
retirement system benefits.
As always, it is
important to be aware of the pros and cons when you find yourself in a
situation concerning Chapter 7 bankruptcy.
PROS
1.) A clean slate.
Once your bankruptcy discharge is granted, you now have the opportunity to
rebuild your credit and work toward achieving a better credit score.
2.) Immediate relief.
Once your case is filed in bankruptcy court, an automatic stay will be
triggered which will then protect you from the creditors who have been after
you.
3.) You’ll be able to keep more than you
think. As discussed above the law protects certain exempted
property, and if it meets this requirement, then you do not lose it by filing
Chapter 7 bankruptcy.
CONS
1.) Means Test. There
are income limitations to file a Chapter 7 bankruptcy. It is important to know
what these limits are before filing. Certain incomes are not included (ie. Social Security).
2.) Not protecting others. Filing
for Chapter 7 eliminates your
obligation. Filing does not mean that other friends and family members will
also have their obligation eliminated. Again, that is an issue for Chapter 13,
an area that The Law Office of Marcie Baker does not handle.
3.) Unsecured debts. There
are certain debts that can never
be discharged by filing for bankruptcy. Child support and alimony are two of
them. Additionally, certain student loans are also never discharged so be sure
to discuss any, and the types, that you have with your attorney. Be sure that
you are aware of the debts/money that you will still owe, despite filing for bankruptcy.
As I have said before,
bankruptcy law does not require that you have an attorney, however, it is in
your best interest to hire one in order that you can make sure that the
proceedings are being handled clearly/fairly. The Law Office of Marcie Baker
would be happy to meet with you for a free consultation to address any of your
needs and concerns and work to help you in the best way that we can.
***The information in this blog post is for
informational purposes only and does not constitute any form of legal advice.
If you have questions regarding Chapter 7 bankruptcy please fill out our
contact form below to schedule a free consultation.***
Sources: https://upsolve.org/learn/pros-cons-filing-chapter-7-bankruptcy/
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