Chapter 7 Bankruptcy

Chapter 7 Bankruptcy

Filing a Pensacola FL Chapter 7 Bankruptcy

There are various types of bankruptcy that you can file as an individual or a business entity.  Filing for bankruptcy can become very complicated very quickly. It is vital that you keep yourself well-informed and choose the right form of bankruptcy that best suits your circumstances. Chapter 7 bankruptcy, being the simplest and fastest bankruptcy, is more suitable for individuals with low income who find it impossible to keep up with their credit card payments, medical bills, and other loans.

How Chapter 7 Bankruptcy Will Affect You

With Chapter 7 bankruptcy, you are offered a clean slate. Most of your debts including credit cards, medical bills, and other unsecured debts will be wiped out. This means that your creditors no longer have the right to initiate further actions to retrieve their debt from you. The downside is that you must be prepared to part with personal property. The bankruptcy code provides for the sale of your assets to pay off your debts. The trustee will be paid a commission. Your personal property under certain limits will be exempt from this rule though. Contact us for details on how much property you can keep. For example, you may be eligible for the Florida homestead exemption if you have lived in the state for at least 2 years. You can generally also keep enough personal property to ensure your fresh start. There are some non-dischargeable debts like fraudulent debts, alimony, student loans, and child support that will not be discharged through a Chapter 7 bankruptcy. Moreover, the court may deny the debtor a discharge if it finds out that the debtor:

  • Committed a bankruptcy crime
  • Tampered with a property that was supposed to be a property of the estate.
  • Did not provide correct financial records
  • Refused to abide by the bankruptcy court orders.

Bankruptcy Law Exemptions (Florida)

Florida, along with 37 other states, is an ‘opt out’ state in that it has its own separate state bankruptcy laws which differ from the Federal laws. Fortunately, these Florida exemption laws are quite favorable to debtors. Some of the exemptions include –

  • Homestead
  • Personal property
  • Motor Vehicle
  • Annuities
  • Alimony
  • Business/work tools
  • Wages
  • Pension payment
  • Social security benefits
  • Employment benefits
  • Damages from personal injury lawsuits up to certain limits
  • Disability income and benefits up to certain limits


Eligibility for Chapter 7 Bankruptcy


To be eligible for the Chapter 7 bankruptcy, the debtor must pass the bankruptcy means test, which is like an equation to determine whether his or her income is high enough to pay creditors. These are the primary advantages to filing Chapter 7 bankruptcy:

  • It involves a simple and fast process that is quite easy to understand.
  • Debts can be discharged.
  • The liquidation process is transparent as it is handled by a trustee.
  • The debtor can reaffirm debts on certain assets that are necessary for the debtor to obtain a fresh start.

The biggest disadvantage is the loss of certain non-exempt properties. We cannot stress how important it is that you enlist the services of experienced bankruptcy attorneys to help you make the right decisions.