Chapter 7 Bankruptcy
As a consumer with overwhelming financial problems, you have two options if you decide to choose bankruptcy as a remedy to manage your debt: Chapter 7 or Chapter 13. Both types of bankruptcy have to be filed and approved by the court, but the difference is that a Chapter 7 will eliminate all allowable debt, while chapter 13 will forgive some debt, consolidate other debt, and set up a repayment schedule of typically 3 to 5 years.
Benefits of Chapter 7 Bankruptcy
Chapter 7 forgives debts due to creditors and relieves you from the obligation of repaying them. Clearwater bankruptcy lawyer, Jake Blanchard will guide you through the process that involves listing all your debts and submitting forms to the court. Once the process is in motion, you no longer have to endure collection calls, wage garnishments, repossessions, foreclosures, or lawsuits. The law does require that you take a short Debtor Education Course to help you plan your new debt-free life.
Although Chapter 7 forgives most consumer debt, medical expenses, personal loans, judgments, deficiency debts from repossessed vehicles and foreclosed property, and personal injury debt, there are certain debts that are not considered “dischargeable.” Most student loans, certain taxes, alimony and support, penalties, fines, criminal restitution, or debts you accrue by intentionally injuring someone else cannot be put in the bankruptcy.
Do you qualify for Chapter 7 Bankruptcy?
Obtaining forgiveness of your debts is a serious matter, so your attorney will work with you to see whether you qualify. According to the Florida Bankruptcy Code, you must pass a means test that examines your income, expenses, debts, exemptions, and assets, and verifies that you are unable to repay the debt. If you make less than the Florida median income for households of the same or similar size, you pass the test and your attorney is able to move on to file your bankruptcy. You also pass if the majority of your debt is not consumer debt.
If your income is greater than the median, you must pass part two of the means test, which analyzes your finances to determine your current monthly income (CMI) vs. allowed expenses for housing, transportation, taxes, food, clothing, etc. The purpose of the test is to determine how much, if any, disposable income you have left that could be applied to your debt. If you do not pass the means test, you are not eligible to file Chapter 7 bankruptcy, but can apply for Chapter 13.
What To Expect After The Means Test
Successful candidates can move on to the next stage in the process, which will ultimately leave you debt free. Once your attorney files the papers, several things happen:
• You receive an Automatic Stay of Bankruptcy, which means that your creditors receive notification of your impending bankruptcy.
• Secured creditors, such as the bank that holds your mortgage, will typically dispute your filing.
• The court appoints a Chapter 7 Trustee who will handle your case and arrange for the sale of any nonexempt assets you hold.
• The trustee sets up a “creditors meeting,” also known as a 341 meeting, to ask you a few questions about the information that your attorney has submitted.
• If the trustee and your creditors have no objection, most of your debt will be discharged.
• About four months after you have filed for bankruptcy, you will receive a notification of your bankruptcy discharge in the mail.
Put Your Trust In Blanchard Law, P.A.
Although the process sounds simple, you need an experienced attorney to help you present your case effectively. Jake Blanchard, your Clearwater bankruptcy attorney, will help you properly determine your assets and expenses and help you retain ownership of your home and vehicle if you are able to make the payments on them. As he is also a qualified Clearwater foreclosure attorney, he can help you through that process as well if necessary.
If you think that Chapter 7 bankruptcy might be an option for you, contact Blanchard Law today at (727) 531-7068 or fill out our website form for a free consultation.