Chapter 7 (Eliminate Debt)

A Chapter 7 “wipes out” credit card debt, most unsecured loans, hospital bills and judgments. Usually, you can keep all of your property. You won’t lose your home (homestead) or your car.  You must stay current on the payments on the items you wish to keep, such as your home, car, furniture, boat and etc.

Other things you need to know about Chapter 7:   

• Stop garnishments
• Keep everything
• Tax returns and tax refunds
• Driver license reinstatement
• Gifts and Inheritances.   

KEEP EVERYTHING?  CHAPTER 7

Your house -

You may keep your house, provided it is located in Florida, is truly your homestead and you live in it at the time of filing.

If you live in the country, you may keep up to 160 acres, provided they are contiguous (join one another) and your house or mobile home or manufactured home is located on it.

If you live inside any city limits, you can keep your house, mobile home or manufactured home and land, equal to a normal building lot.

You must keep paying your mortgage.  If you stop or get behind, your mortgage company can foreclose.  At your initial free consultation, our bankruptcy lawyers will discuss the issue of your mortgage and whether or not you are behind.  We may recommend that you file a Chapter 13.

Your car in a Chapter 7 -

In a Chapter 7, you are able to keep $1,000.00 equity in your vehicle and $1,000.00 equity in your spouse’s vehicle, if they are also filing.  The equity in your vehicle is calculated by using the average value between loan and retail value as shown in the NADA book, less what is owed.  

For example, the average value of your car is $10,000.00, you owe $12,000.00, just keep paying the monthly note on the car and you will be fine.

Example 2, the average value is $10,000.00 and you owe $9,200.00.The $10,000.00 minus $9,200.00 equals $800.00 and this is less than the $1,000.00 exemption.  You keep paying on the car and you keep it.

Example 3, The average value is $10,000.00 and you owe $6,000.00 which will result in $4,000.00 equity less the $1,000.00 exemption will equal $3,000.00.  In this case as you have a lot of equity in your car, you will have to pay the Trustee $3,000.00 in order to keep your car.  They normally allow the payment to be spread out over a year in monthly payments.  You have to pay the Trustee and keep your car payment current in these cases to keep you car.

NO YOU CANNOT

You cannot transfer your car to your family or friends, nor can you sell it for a dollar or less than fair market value, to avoid the application of the $1,000.00 exemption limit.

YOU CAN SAVE YOUR CAR

By filing a Chapter 13 if you have too much equity.

STOP GARNISHMENT OF YOUR WAGES

Once we file the paperwork with the court, most garnishments on your wages stop instantly.

FURNITURE, CASH AND OTHER ASSETS

In addition to your homestead exemption and your car exemption, you can keep a total of $1,000.00 worth of other things, such as furniture, clothes, cash, etc.  This will be enough, in most situations, as the furniture is valued basically at yard sale value.

If you are over the exemption, due to equity in your car, furniture or other assets, then a Chapter 13 might be the solution.

OTHER EXEMPTIONS

Your retirement, social security, future payments, workman’s compensation, and IRA’s are all 100% protected in addition to the other exemptions.

DRIVER’S LICENSE REINSTATEMENT

If your license has been suspended due to an accident where you didn’t have insurance, a Chapter 7 will often remove the requirement that you pay for the damage prior to obtaining a license.

INHERITANCE AND GIFTS

If you are to receive a gift, with more than a little value within 6 months of your paperwork being filed with the court, it will have to be given to the Trustee. (Normal Christmas or birthday-type gifts you can keep.) If you receive or are entitled to an inheritance within 6 months of filing Bankruptcy, this also will be the Trustee’s.  Please discuss these possibilities with your bankrtupcy lawyer, thoroughly, during your free initial office visit or any other time the possibility arises of a substantial gift or inheritance.

TAX REFUNDS

If your paperwork is filed with the Bankruptcy Court towards the middle or the end of the year, your tax refund or a part of the tax refund may belong to the U.S. Trustee, if you are over your exemptions.  Do not spend your tax refund if you receive it after we file your paperwork until you discuss it with our firm.

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