West Palm Beach Chapter 7 Attorney

Chapter 7 Bankruptcy

Federal bankruptcy laws define chapter 7 bankruptcy as, a process by which you are discharged, or freed, from the obligations of your debts. Filling for Chapter 7 bankruptcy initiates an “automatic stay,” which stops current or pending lawsuits, wage garnishments, and any other collection actions against you. In rare cases, a creditor may seek permission from the bankruptcy court to continue collecting on outstanding debt.

Exemptions

According to Florida bankruptcy law, an exemption is a bankruptcy code that allows you to be "exempt" (or keep) large amounts of valuable personal property from your creditors.

Applicants must fully analyze their personal financial situation before filing for Chapter 7. Some cases will not be accepted. More often than not, these cases are referred to Chapter 13 for further consideration, which could be a better fit. Chapter 13 is for working individuals with stable and consistent income. These people create a Repayment Plan to pay a percentage of their general, unsecured debts over a specific time period, usually between 36 to 60 months. Furthermore, filers of Chapter 13 retain all assets and have the opportunity to cure arrears due to secured creditors, such as home mortgage(s), car loans, etc.

How Chapter 7 Works

The process for filing Chapter 7 bankruptcy begins with a petition in court. Applicants must have several schedules, outlining assets, liabilities, current income and expenditures, executory contracts and co-debtors along with any other forms of financial engagement. Florida bankruptcy laws do permit a husband and wife to file jointly or individually.

People filing for bankruptcy must have a variety of information readily available to complete the forms. They are the following:

• Most recent bills/statements from ALL creditors including student loans, unpaid medical bills, unpaid utility bills, etc. These must all include your name, address, zip code, and an account number.
• Any prior Bankruptcy documents.
• Any credit reports.
• Tax bills you might owe, including income tax, excise tax, or real estate tax.
• Documents pertaining to alimony or child support owed to a former spouse.
• Documents for any and all real estate you own (including timeshares). This group should include the deed, HUD Statement, and a statement from the mortgage company showing the balance due on the mortgage. Also, an appraisal of the real estate or a written real estate broker's opinion of value is necessary.
• Proof of insurance for any real estate you own. The "Coverage Selections" page of the insurance policy is most useful.
• Copy of any motor vehicle title or registration you own.
• Proof of insurance for any motor vehicle you own. The "Coverage Selections" page of this policy as well.
• Documents regarding the rental of your apartment such as a lease or sub-let agreement.
• For each secured debt, such as a car loan, a copy of the latest statement showing the name and address of the creditor, the balance due on the debt, the balance of monthly payments left and the date the debt was incurred.
• 6 months of your (and if married and living together, your spouse's) most recent pay stubs.
• 6 months of documentation relating to other sources of income you may have from rental property, businesses, interest and dividends, alimony, child support, pensions, SSI, SSDI, or food stamps.
• Documents relating to any retirement accounts you have including IRA's, 401(k)'s, etc showing the name and address of the administrator of the plan and the value of the account, including any loans against the account.
• The estimated replacement value of your home furnishings, including televisions, stereos, kitchen ware, tables, chairs, beds, sofas, etc. Replacement value is the price a retail merchant would charge for property of that kind taking into account the age and condition of the property at the time the value is determined.
• The estimated replacement value of your clothing, again, keeping in mind that replacement value means the price a retail merchant would charge for property of that kind considering the age and condition of the property at the time the value is determined.
• An estimated value of your jewelry, again, keeping in mind that replacement value means the price a retail merchant would charge for property of that kind considering the age and condition of the property at the time the value is determined.
• A copy of your federal and state tax returns for the last four years.
• Documents regarding any lawsuits you are involved in, wage garnishments, and seizure or foreclosure of property.

Husbands and wives filing joint petitions must be certain to compile data for both parties involved.

Once the petition is filed, the “automatic stay” goes immediately into effect. Creditors are notified by the court clerk and are no longer able to initiate or continue lawsuits, wage garnishments, and telephone calls to collect payment.

At the time of petition, an assets and liabilities “exempt” property may be filed. Under Florida state bankruptcy law, individuals can protect assets from creditors if it is exempt.

Between 20 and 40 days after the Chapter 7 petition is filed, a "meeting of creditors," also known as a "341 meeting," is organized. Debtors and Credits must be in attendance. During the meeting, creditors may ask questions regarding the debtor's financial situation. If a husband and wife have filed jointly, both individuals must be at the meeting. The trustee will also question the debtor on the same matters. In order to preserve an independent, objective decision-making process, bankruptcy judges are prohibited from attending.

What Is A Discharge?

Chapter 7 bankruptcy petitions, when approved, allow you to discharge most personal debts. A discharge is a court order that outlines which debt you do not have to pay back. According to federal law, some debts may not be discharged, save extreme hardship case scenarios. These include back taxes; child support, alimony, and student loans; court-ordered fines and restitution; debts obtained through fraud or deception; and personal injury debts caused by driving while intoxicated or taking drugs.

A judge can deny a discharge for destroying or concealing property or records, and for falsifying information. Creditors are prohibited from collecting debts once they have been discharged. After you have been granted Chapter 7 bankruptcy, you may not file again for eight (8) years.

What Are The Potential Effects of A Discharge?

The effects of Chapter 7 bankruptcy can be damaging. Bankruptcy will appear on your credit report for up to 10 years, affecting your ability to obtain credit or secure a loan in the future. With the proper help and guidance, obtaining a healthy financial stading can be accomplished in much less time. The bankruptcy specialists of the Eric N. Klein & Associates, P.A. offer credit repair help. If you follow our credit restoration program correctly, it may be possible to obtain a mortgage within a year.

Discharge Legal Overview

The Florida Chapter 7 bankruptcy law is complex. Debtors should consult with competent and helpful legal counsel prior to filing. Generally, 99 percent of legitimate Chapter 7 cases are approved. Discharge is usually granted within 90days of the first meeting of creditors.

Denying Chapter 7 bankruptcy, once all the appropriate files are filled out, is rare. Applicants are denied due to a host of different reasons. These include: a failure to clearly explain a loss of assets, committing perjury; a failure to obey the order of the bankruptcy court; or fraudulent transferring, concealing, or destroying of property that would have become estate property.

The information provided from Federal bankruptcy laws presented in this fact sheet is accurate as of the date of publication. It should not be cited, relied upon, or understood as legal authority. It should not be used as a substitute for referring to the United States Bankruptcy Code and the Federal Rules of Bankruptcy Procedure, both of which may be reviewed at your local law library. Finally, this fact sheet should be a supplement, not a substitute, for the advice of competent legal counsel.

Role of The Case Trustee

Once your Chapter 7 petition has been filed, an impartial case trustee is appointed by the United States Trustee to administer the case and liquidate the debtor's nonexempt assets. If, as is often the case, all of the debtor's assets are exempt or subject to valid liens, there will be no distribution to creditors. Typically, Chapter 7 cases involving individual debtors are "no asset" cases.

Our Palm Beach bankruptcy lawyers at the Eric N. Klein & Associates, P.A. firm would like to help you with any questions you might have, don't hesitate to call us at 561-353-2500.

Portions reprinted from the office of the US Department of Justice.