Chapter 7 Bankruptcy
Sometimes known as “liquidation bankruptcy,” Chapter 7 earns this moniker because it requires debtors to sell-off their non-exempt property. The cash generated from liquidation is then used by your bankruptcy trustee – someone assigned by the court to facilitate the sell-off of your unsecured property – to satisfy debts with creditors. Once this is done, your debt is discharged even if the value acquired during liquidation doesn’t completely satisfy what you owed.
People often fear turning to Chapter 7 because they imagine losing everything they own – their homes, cars, clothing, furniture, family heirlooms, jewelry, and other items of real or sentimental value. The good news is that there are exemptions you can claim that bars certain property from liquidation.
Some personal property exemptions in Florida include the following:
- Up to $1,000 in personal property such as furniture, electronics, and art
- Savings accounts for education, healthcare, and hurricane matters
- Prescribed health aids
- Tax credits and refunds
- Certain property owned in a partnership
- Up to $4,000 in personal property can be claimed if the debtor does not claim the Homestead Exemption.
Florida’s Homestead Exemption can be used to exempt an unlimited amount of equity in your home or another property covered by this exemption. This is contingent on the property being no larger than half of an acre when located in a municipality, or 160 acres elsewhere. Prior to claiming the Homestead Exemption in a Chapter 7 bankruptcy filing, you must have owned the property for at least 1,215 days.
Florida’s Motor Vehicle Exemption similarly allows people to preserve equity in these investments. An individual can exempt up to $1,000 of equity in a motor vehicle. This amount may increase if bankruptcy is jointly filed by a married couple.
There are many other exemptions available to help you protect other assets such as wages, pensions, public benefits, insurance payouts, lawsuit judgments, and more.
If you are thinking about liquidation bankruptcy, it’s best to consult with a Chapter 7 and Chapter 13 bankruptcy attorney in Miami. Our team at Wesoloski Carlson, P.A. has the knowledge and experience to walk you through your options and help you take action to resolve your debt problems.
Chapter 13 Bankruptcy
The same kinds of consumer debt that can be discharged in Chapter 7 bankruptcy can be reorganized and settled in Chapter 13. This is also an important tool debtors can use to stop foreclosure proceedings and protect their homes.
While Chapter 7 liquidates property to pay off creditors, this isn’t required in Chapter 13. Instead, reorganizing debt obligations – also seen in Chapter 11 for businesses – to your creditors’ satisfaction is key. As with Chapter 11, you and your attorney will develop a repayment plan to help you pay back your creditors what you owe in missed payments during the duration of a plan that can last three to five years.