There are thousands of Floridians who are struggling with debt and file Chapter 7 bankruptcy every year. Chapter 7 bankruptcy can help you eliminate some or all of your debt and give you a clean financial slate so you can start fresh again. However, before filing this type of bankruptcy, it is critical to understand the process, who is eligible, and more. It is natural to have a lot of questions before and during the process. Below, our Chapter 7 bankruptcy lawyer outlines the questions we hear most frequently, and the answers behind them.
What is Chapter 7 Bankruptcy?
Chapter 7 bankruptcy is also known as liquidation bankruptcy. A bankruptcy trustee oversees the case and may seize some of the borrower’s property to liquidate, or sell, and use the proceeds to repay creditors. There are many steps involved in theChapter 7 bankruptcy process including the means test, the meeting of the creditors, and more. When all steps in the process have been completed, the borrower’s debt is discharged, or eliminated. Not all debt is eligible for discharge in bankruptcy.
What Debt Can Be Discharged in Chapter 7?
Chapter 7 bankruptcy is meant to eliminate most unsecured debts. This can include medical bills, credit card debt, and personal loans. Repossession balances after a vehicle repossession or foreclosure can also be discharged, as well as past due utility bills.
What Debt Cannot Be Discharged in Chapter 7?
Although there are many different types of debt that can be discharged in Chapter 7, there are also many that cannot. These include the majority of student loans, income tax debt particularly if it is recent, court judgments related to a DUI, and any debt incurred through fraud.
What is the Automatic Stay?
The bankruptcy court will issue an automatic stay as soon as you file any type of bankruptcy. The automatic stay prohibits mortgage lenders, creditors, and others from contacting borrowers to try and recover any debt. The automatic stay is typically of great relief to borrowers. Not only does it stop harassing collection calls but it can also stop foreclosures and other collection action until the bankruptcy case is finalized.
What is the Means Test?
The means test was part of the large bankruptcy reform laws introduced in 2005 meant to prevent bankruptcy fraud. The test determines if a borrower has enough income, or sufficient means, to repay their debts. It is designed to prevent individuals with higher incomes from discharging their debt through Chapter 7. If a borrower’s income is too high they will not pass the means test and will have to fileChapter 13 bankruptcy instead.
What is the Meeting of the Creditors?
The meeting of the creditors, also known as a 341 meeting, is a meeting conducted by the bankruptcy trustee. The borrower is placed under oath and creditors have the opportunity to ask them questions about their debt and financial situation. Although any creditor owed a debt has the right to attend the meeting, many do not.
Is All Property Seized During Chapter 7?
It is a very common misconception that borrowers lose all of their property during Chapter 7. While it is true that the bankruptcy trustee may liquidate some property to repay creditors, Florida also has some of the most generous bankruptcy exemptions in the country. To claim these exemptions, you must be a resident of the state for at least 730 days. The exemptions allowed under state law are as follows:
Although the exemptions in Chapter 7 are generous, they are also very nuanced and have their own requirements. It is critical to speak to a Chapter 7 bankruptcy lawyer who can explain them thoroughly before you file. It is also very important to note that many borrowers do not lose any property when filing Chapter 7.
Who Can File Chapter 7?
Anyone who lives in Florida can file Chapter 7 bankruptcy in the state as long as they meet the eligibility requirements, such as passing the means test. The only exception to this is a borrower that has had a bankruptcy case dismissed within the previous 180 days. However, this does not mean that all borrowers should file Chapter 7 to eliminate their debt. If a person’s debt will not be discharged in Chapter 7, for example, it might not be wise to file Chapter 7 because the court may dismiss the case on the grounds of abuse.
How Much Does Filing Chapter 7 Cost?
In 2025, the filing fee for Chapter 7 is $338. This fee must be paid at the time bankruptcy is filed with the court. If you cannot afford the filing fee, you can apply for a waiver based on low income or you can ask to pay it in installments.
How Long Does Chapter 7 Bankruptcy Take?
A chapter 7 case begins when the necessary papers are filed with the court. If a borrower does not have any non-exempt property for the trustee to collect, the case will be finalized shortly after the borrower receives a discharge, which is typically four months after the papers are filed with the court. If there is property to collect and sell, the length of the case will depend on the amount of property and the time it takes the trustee to perform their duties.
Our Chapter 7 Bankruptcy Lawyer in Orlando Can Answer Your Questions
When filing Chapter 7, you will have many questions. At The Benenati Law Firm, our Orlando Chapter 7 bankruptcy lawyer can answer them so you can make informed decisions and the process will be as easy as possible for you. Call us now at 407-777-7777 or fill out our online form to schedule a free consultation and to learn more about how we can help.
