What is a Chapter 7 Bankruptcy?
A Chapter 7 bankruptcy case is often referred to as a “liquidation” or “straight bankruptcy” because the debtor is not required to pay back a portion of his or her debt to unsecured creditors. However, any non-exempt property that the debtor owns is liquidated by a Chapter 7 trustee and the funds are used to pay the debtor’s creditors. In order to qualify to file Chapter 7, the debtor must meet certain income requirements. To determine if you qualify to file under Chapter 7, you need to consult with an experienced bankruptcy lawyer in Okaloosa County.
The Marsteller Law Office, LLC helps individuals and businesses file Chapter 7 in Okaloosa County. If you have debts that you cannot pay, contact our office to schedule a free bankruptcy consultation. You are under no obligation — we want you to have the facts about bankruptcy so that you can make an informed decision about how to resolve your financial problems.
How Do I Qualify For Chapter 7 in Okaloosa County?
When Congress revised the Bankruptcy Code in 2005, an income test was added as a requirement to file Chapter 7 — the Means Test. The Means Test only applies to individuals filing under Chapter 7. A business can file a Chapter 7 bankruptcy; however, the business ceases to operate when it files under this chapter.
In order to qualify to file under Chapter 7, your household income must be below the median income of a household of your size in your county. The Means Test uses your average gross income from the past six months to generate an annual income amount that is compared to the median income. If your gross income is below the median, you “pass” the Means Test and may proceed with a Chapter 7 case.
Failing the Means Test does not necessarily mean you cannot file a Chapter 7 case. The Means Test also calculates your disposable income by subtracting allowable monthly expenses from gross income. If your disposable income is below the allowable limit, you qualify to file under Chapter 7.
You should consult with an experienced bankruptcy lawyer to determine if you qualify for Chapter 7. An experienced attorney understands how to take advantage of each monthly expense allowed under the law to decrease your monthly gross income as low as possible to qualify for a Chapter 7.
Will I Lose All Of My Property If I File Chapter 7 Bankruptcy?
The assumption that a person loses all of his or her property when filing a Chapter 7 is a common misconception. Very few Chapter 7 cases filed in Okaloosa County are “asset cases” resulting in the debt losing some of his or her property. Bankruptcy exemptions allow debtors to protect a certain property from their creditors and the court.
A Chapter 7 trustee may only liquidate property that is non-exempt. Almost all Chapter 7 cases are “no asset cases” meaning the debtor discharges most, if not all, of his or her debt while retaining all property. As an experienced bankruptcy law firm, we know how to maximize your bankruptcy exemptions to protect your property while getting rid of your unsecured debts.
How Long Does Chapter 7 Take?
A typical Chapter 7 case is discharged and closed within four to six months from the date of filing. Within 30 to 40 days after your case is filed, you will attend a short hearing held by the Chapter 7 trustee to answer questions under oath about your financial situation. The hearing is referred to as a Meeting of Creditors because creditors are permitted to attend and ask you questions; however, it is rare that creditors appear at these hearings.
Creditors have 60 days from the hearing date to file objection to discharge. Once this deadline has passed, the court will issue your discharge and close your case.
Can I Discharge All Of My Debt In A Chapter 7 Case?
Most unsecured debts are dischargeable in a bankruptcy; however, you cannot discharge alimony or child support in bankruptcy. Most taxes and student loans are also non-dischargeable but there are a few exceptions depending on when the taxes were originally due and whether you qualify for a hardship discharge for student loans.
Secured creditors hold liens on property as collateral for the loans (i.e. mortgages and car loans). These debts can be discharged; however, the liens will not be released. If you choose to surrender the collateral, you will not be required to repay the secured debt. If you choose to retain the collateral, you must continue to pay the loan payments.
Contact an Experienced Bankruptcy Attorney in Okaloosa County
If you are considering filing a bankruptcy case or you want more information about the bankruptcy process, contact The Marsteller Law Office, LLC to speak with an experienced bankruptcy lawyer. You can reach our office by telephone at (850) 497-2500 or complete an online intake form so we can begin reviewing your information immediately.