Free Initial Phone Consultations
Chapter 7 starting at $999, plus filing fees and costs.
Chapter 13 starting at $2,500, plus filing fees and costs.
What is Chapter 7 bankruptcy?
Chapter 7 is a process known as liquidation bankruptcy or “straight bankruptcy”. In Chapter 7 bankruptcy, a trustee sells the debtor’s non-exempt assets, or unprotected assets, and distributes the net proceeds of those assets to creditors. The debtor is allowed to keep exempt assets. See Florida Exemptions.
In Chapter 7 Bankruptcy, most debts are discharged, and the debtor generally loses only non-exempt property. Most Chapter 7 cases are no asset cases, so most Chapter 7 debtors retain all of their property. Certain debts, however, may be non-dischargeable, leaving creditors free to pursue collection from the debtor after bankruptcy. See Non-Dischargeable Debts.
Chapter 7 Overview
A debtor can commence a bankruptcy case by filing a petition in the bankruptcy court. The petition must be accompanied by the appropriate filing fee. The most difficult part of filing a bankruptcy case is gathering all financial information that to complete the numerous schedules, which must be filed at or near the time of filing of the petition. See Required Financial Disclosure. The bankruptcy debtors are also required to pass a “means test” to qualify for bankruptcy. Otherwise, the case will be dismissed. See Dismissal.
In most cases, the minute the petition is filed, the “automatic stay” goes into effect, i.e., creditors must stop all collection activities, wage garnishment, driver’s license suspension due to an outstanding personal injury judgment, etc. The timing of the bankruptcy filing also determines what property will be part of the bankruptcy estate, i.e., property that may be available for liquidation and distribution to creditors. See Property of Bankruptcy Estate.
After the debtor files the necessary documentation, the trustee will hold a meeting of creditors to examine the debtor and make further inquiry into the possible existence of assets that could be recovered for the estate. See 341 Meeting. The trustee then sells any property of the estate that is not exempted by the debtor or abandons it and distributes the net proceeds to creditors. If there are no assets to sell (so called “no-asset” cases), the trustee will file a “no asset” report and the debtor will be granted a discharge in 2-3 months. See Discharge.
Chapter 7 Bankruptcy Timeline
Pre-Bankruptcy Credit Counselling
Within 180 day before filingBankruptcy Planning
Debtors are required to complete credit counseling with an approved credit counseling organization within 180 days prior to bankruptcy.
The credit counseling may occur on the same day as the filing as long as it is before the moment of filing of the petition. The credit counseling court generally last 60 to 90 minutes and may be completed online or over the phone.
Bankruptcy planning is recommended as timing the bankruptcy filing is critical to a successful case.
Debtor also needs to gather extensive financial documents to evaluate and prepared the case for bankruptcy.
Day 1
Bankruptcy PetitionFiling for Chapter 7 Bankruptcy
A Chapter 7 begins either when the debtor files a bankruptcy petition and a list of creditors and pays a filing fee of $338, or when the debtor files a Notice of Conversion from Chapter 13 to Chapter 7 and pays a filing fee of $25.
The petition is filed in the bankruptcy court located in the district where the debtor has lived for 91 days prior to filing.
Filing the bankruptcy petition automatically stops most collection activity against the debtor and creates a bankruptcy estate consisting of all property of the debtor. The automatic stay does not stop collection activity against the co-debtors.
A trustee is appointed to administer the case.
Day 1-14
Schedules, Statements, and Other DocumentsFiling of All Other Documents
All other schedules and documents must be filed with the court within 14 days of filing, if not filed with the petition. If a case is converted from Chapter 13 to Chapter 7, the debtor needs to file all required documents, if not previously filed in Chapter 13, within 7 days.
Shortly After Bankruptcy Filing
Notice of Chapter 7 Bankruptcy CaseNotice of Commencement of Case
The court mails the Notice of Chapter 7 Bankruptcy Case to the debtor and the creditors. The notice is a confirmation that a Chapter 7 case has been filed and it contains the date, time and Zoom link for the meeting of creditors, important deadlines, and other important information.
Day 1-30
or on or before the day of Meeting of Creditors, whichever is earlierStatement of Intentions
The Statement of Intention is a document that lists the debtor’s secured debts and describes the debtor’s intention with regard to collateral (retain/exempt, surrender, reaffirm, or redeem).
If not filed with the petition, it must be filed within 30 days of filing the bankruptcy petition or on or by the date first set for the Meeting of Creditors, whichever comes first.
At least 7 days before Meeting of Creditors
unless the debtor has circumstances beyond his controlMost Recent Tax Return
The debtor shall provide a copy of the debtor’s most recent Federal income tax return to the trustee and to any creditors that have requested it.
Meeting of Creditors (“341” Meeting)
20-40 days after filingExamination of Debtor
Debtors must attend a meeting of creditors for examination under oath by their creditors and the trustee. The meeting of creditors is held via Zoom call and usually lasts 5-10 minutes.
In most cases, the creditors do not appear, and the questioning is done solely by the trustee.
Prior to the meeting, debtors must deliver to the trustee the certain financial documents, such as copies of tax returns, bank statements, pay stubs, titles, etc.
30 Days after Meeting of Creditors
unless extended by the courtSurrender, Redeem, Reaffirm
Debtor must perform the stated intention with respect to all secured property.
Debtor can either surrender the collateral (house or car), or keep the collateral and either reaffirm the debt or redeem the collateral. The proposed reaffirmation agreements must be filed with the court within 60 days after the date first set for the meeting of creditors.
For more information, see Reaffirmation and Redemption in Chapter 7.
30 days after Meeting of Creditors
or 30 days after amendments to the schedulesDeadline to Object to Exemptions
If the Trustee or other party of interest objects to the debtor’s claim of exempt property, they must make their objection within 30 days after the conclusion of the 341 meeting, or after the amendment of the property and exemptions schedules, whichever is later.
The objecting party has the burden of proving that an exemption was not properly claimed.
Within 60 days after the first date set for the meeting of creditors
unless the court extends the timeDeadline to Object to Discharge or Challenge Dischargeability
See Discharge and Non-Dischargeable Debts.
Any time after bankruptcy filing
but before dischargePre-Discharge Debtor Education
After the bankruptcy filing and before discharge, the debtor must take a Financial Management Course. The
course can be completed online or over the phone. A certificate must be filed with the court within 60 days after the first date set for the meeting of creditors.
Anytime During Bankruptcy
(re-open the case if the case is closed)Motions to Avoid Lien
Lien avoidance is a process to legally remove a creditor’s lien on from the debtor’s property. Debtor may file a motion to avoid certain liens on property anytime during the bankruptcy case, or if the case has been closed, debtor must request the court to re-open the case to file the motion. See Lien Avoidance in Bankruptcy.
Closure of the Case
3-4 months after filingChapter 7 Discharge
The timing of the discharge varies from case to case.
The court enters the order of discharge shortly after the deadline has passed to object to discharge, which 60 days following the first date set for the 341 meeting.
The discharge is the order from the court forgiving the debtor from certain debts. The court mails the order of discharge to the debtor and/or the debtor’s attorney, the trustee, and all creditors.
The debtor’s creditors cannot attempt to collect on the debts discharged in bankruptcy.
Not all debts are dischargeable. For more information, see Non-Dischargeable Debts.
Benefits of Chapter 7 over Chapter 13
First of all, Chapter 7 is a much shorter process. In no-asset cases, the Chapter 7 debtor can receive a discharge in 3-4 months from the date of the bankruptcy petition filing. Chapter 13 bankruptcy cases last 3 to 5 years.
Another meaningful advantage is that in Chapter 7 cases, there is no pay back on most unsecured claims (credit cards, medical bills, personal loans, etc.). Most of the unsecured debts are eliminated. Chapter 13 debtors, however, are required to pay back some, or in some cases all, of the unsecured debts over the 3-5 year period.
Chapter 7 debtors can receive an immediate discharge without paying creditors any of the debtor’s future income. There are a few exceptions. See Property of the Estate. In Chapter 13, however, the debtor will not receive a discharge until the debtor devotes all of the debtor’s projected disposable income for 3-5 years.
Chapter 7 debtors may be able to eliminate their debts while keeping some of their non-exempt assets. In Chapter 13 cases, to keep non-exempt assets debtors have to pay off the value of non-exempt assets to creditors through the 3-5 year plan.
Also, Chapter 7 offers savings with respect to attorney fees. Our Chapter 7 fees start at $999 and Chapter 13 fees start at $2,500.
Finally, Chapter 7 debtors may be able to repair their credit faster than Chapter 13 debtor.
How can we help?
If you live paycheck-to-paycheck and struggle to pay your debts, call us for a free phone consultation to learn your options. You may qualify for Chapter 7 bankruptcy; however, it does not mean that it is the only option or the best option in your situation. There are many alternatives to bankruptcy, such as debt settlement, debt consolidation, liquidation of assets, asset protection, and sometimes even just knowing your rights and doing nothing.
At Anna Handy Law Firm, P.A., we are acutely aware of the financial strain of our clients. We do not charge you for the initial phone consultation. We do not push you to file bankruptcy to get a retainer. We don’t judge – we find solutions. We give you honest advice about your options and rights, including the “doing nothing” approach. As such, we offer very affordable bankruptcy fees. We make our fees competitive and in certain cases, we offer payment plans to address each case individually as each case has a different set of circumstances.
If you are overburdened by your debts, being sued or harassed by creditors, or subject to wage garnishment, do not hesitate to call us now for a free initial phone consultation. The attorney’s direct business cell phone number is (386) 248-3000. You may also email us at [email protected].