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Chapter 7 Bankruptcy Tampa Florida Bankruptcy Attorneys and Lawyers |
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A Chapter 7 Bankruptcy is also called a Straight
Bankruptcy. It is designed to eliminate Unsecured Debts such as credit
cards, medical bills and signature loans. The United States Bankruptcy Laws are inherited from England. Bankruptcy Law has existed for many hundreds of years. At one time in England, Debtors were sent to penal colonies, most notably Australia. The English fashioned Bankruptcy laws to avoid this harsh result. With limited exceptions, you can not go to jail for owing debt. Chapter 7 Bankruptcy is also called Straight Bankruptcy or Straight Liquidation. In a Chapter 7 Bankruptcy, a Debtor is allowed to keep only certain assets as provided under Federal or State Bankruptcy Laws. A Chapter 7 Bankruptcy Trustee is assigned by the Federal Bankruptcy Court to administer your Case on the Court’s behalf and to determine what Assets the Trustee may sell to pay the Debtor’s Creditors. For example, in Florida, if a Debtor has a Home and a Motor Vehicle, she is generally only allowed to have $1000.00 equity in the Motor Vehicle. If the Debtor does not have a house or is surrendering her house, she is permitted $5000 in personal property and $1000 equity in an auto. This is usually not a problem because most Debtors do not have any equity in their Motor Vehicles. However, if one significantly exceeds the Equity Allowance or Exemption in that Motor Vehicle, then the Chapter 7 Trustee can sell the Vehicle at a Bankruptcy Auction, give the Debtor her $1000.00 Allowance and distribute the remainder of the proceeds to the Creditors, and the Trustee herself in the form of a Fee or Commission. Your Bankruptcy Attorney can also negotiate a Buy-Back where you, the Debtor, are allowed to “buy-back” the amount you exceed the Motor Vehicle Equity Exemption over a period of usually three to six months by paying the Chapter 7 Trustee the amount you exceed the Exemption in payments. Chapter 7 Bankruptcy Trustees can sometimes be very aggressive in the pursuit of your property. Most of their income is derived from seizing the property of Debtors. One of the advantages of a Chapter 13 Bankruptcy over a Chapter 7 Bankruptcy is the Chapter 13 Trustee has historically taken a softer approach towards Debtors. |
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This is the basic principle behind Bankruptcy Law. Bankruptcy Law is a
balancing of the interests between Debtors and Creditors. Bankruptcy Law
is designed to give Debtors a “fresh start” and therefore the Laws allow
one to Discharge or eliminate their Debts, but Debtors are only allowed
to retain a prescribed number of Assets. If one exceeds that prescribed
number of assets, the Bankruptcy Court through a Bankruptcy Trustee can
Auction or liquidate those Assets to benefit the Creditor’s interests. In a Chapter 7 Bankruptcy or a Chapter 13 Bankruptcy, the Debtor is required to attend a 341 Creditor Hearing. A 341 Hearing is so named because it is organized and explained under section 341 of the United States Bankruptcy Code. We represent all of our clients at the 341 Hearing. In a 341 Hearing, we meet with the Bankruptcy trustee. The Bankruptcy Trustee is an individual assigned by the Bankruptcy Court to administer your case on the courts behalf. The Bankruptcy Trustee acts as an intermediary between you and your attorney and your creditors. In a Chapter 13 Bankruptcy, the trustee mostly focuses on what she believes to be a fair repayment in your case based upon factors such as your income, assets and expenses. Often, the Chapter 13 Bankruptcy Trustee and your attorney will have different opinions as to what constitutes a fair repayment. In such cases, we will then argue your case before the Bankruptcy Judge. In a Chapter 7 Bankruptcy, the Bankruptcy Trustee is mostly focused on what assets the Debtor may have that she can liquidate or sell to pay the Debtors Creditors. Any assets that exceed the Debtors exemptions as provided under State or Federal Law may be subject to liquidation. It is the duty of your Bankruptcy Attorney to protect your property or assets within the confines of the Bankruptcy Laws. The 341 Hearing is also called a Creditors Hearing because your Creditors may attend the Hearing to ask questions. However, most of the clients we represent never see a creditor at their hearing because most of the creditors deal with our office directly through the telephone, mail or email. |
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In either a Chapter 7 Bankruptcy or a Chapter 13 Bankruptcy, we will
review with the Bankruptcy Trustee required documents such as Tax
Returns, Pay Check Stubs or Evidence of Income, Bank Statements and
other required documentation. There are also Income Restrictions on whether a Debtor qualifies of a Chapter 7 Bankruptcy. If a Debtor exceeds various Income Levels based on the number of Persons in her Household, she may not qualify for a Chapter 7 Bankruptcy. A Debtor may not qualify for a Chapter 7 Bankruptcy if she makes too much money to qualify for a Chapter 7 Bankruptcy. She may not qualify for a Chapter 7 Bankruptcy if her properties exceed the exemptions for a Chapter 7 Bankruptcy (for example more than $1000 in personal property). In that case she may file a Chapter 13 Bankruptcy and pay a reduced payment to creditors. If a Debtor does qualify, the Chapter 7 Bankruptcy generally can eliminate her Credit Card, Medical Bills, and other Unsecured Debts. It may eliminate Tax Debts in some cases and Student Loans in almost no cases. Student Loans can sometimes be Discharge in Bankruptcy if the Debtor can prove an “undue hardship”. There is a three-part test to prove undue hardship but the Bankruptcy Courts have a stringent standard for proving Undue Hardship. There have been hundreds of cases litigated in the Bankruptcy Courts but few have allowed Student Loans to be discharged because of undue hardship. It can eliminate most or all the Debt associated with a House or Real Property that is surrendered back to the Mortgage Company. |
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 The Chapter 7 Bankruptcy will be on your Credit Report for ten (10) years. However, you can re-establish your Credit much faster than ten years, through a well-conceived Credit Repair Program and various strategies to improve your Credit Report Score. The Bankruptcy in itself can be an initial step in establishing your Credit because a successful Bankruptcy will dramatically improve your Debt to Income Ratio, which is a crucial element in determining Credit. Taking the step of filing a Chapter 7 has to be taken very seriously. All the documents you sign and submit to the Bankruptcy Court will be signed under the penalty of perjury, so it’s important to fully prepare the documents with all of the information requested. Also, a Debtor in Chapter 7 Bankruptcy does not have an automatic right to dismiss his case. The filing of a Chapter 7 Bankruptcy puts into effect several laws regarding previous transfers of property. It is important to consult an attorney if you’ve transferred, sold, or given anything away of value before the time you wish to file your Bankruptcy. The Bankruptcy Laws also look to what kind of Debt you incurred right before filing Bankruptcy and the reasons for incurring such Debt. For example, it is not advisable to take cash advances up to a year before you plan to file Bankruptcy. If the Bankruptcy is successful, the Chapter 7 Bankruptcy Debtor receives a discharge about 90 to 120 days after filing for Bankruptcy. The Discharge is mailed to the Debtor by the Bankruptcy Court and is an important document that should be safely filed away in case any creditors try to start collection on a debt that was included in your Bankruptcy. The Discharge can also be useful in cleaning up your Credit Report and when trying to rebuild your credit by financing a purchase. |
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