Most people that contact our office who are interested in bankruptcy have experienced some type of financial hardship like loss of employment or injury or a divorce. This is nothing to be embarrassed about and is much more common than most people think. Bankruptcy is not an ugly word or something that you should be ashamed of. Most of the time it is actually a sound, logical, rational and financial decision that more people should utilize.
Most individuals that are interested in this as an option have fallen behind on their credit card or medical debt payments. Some have houses that are currently in foreclosure or they have a judgment from a previously foreclosed home. And some individuals are actual current on their monthly payments but are depleting their savings, retirement accounts and sometimes taking monthly pay-day-loans just to stay afloat.
One of the largest concerns for individuals is that they will be able to stay in their house or keep their car and the answer is generally “Yes”. Bankruptcy is a federal lawsuit but each individual State has its own set of Exemptions (or protections). Florida Exemptions allow for various assets to be protected.
In a Chapter 7 Bankruptcy the exemptions are as follows:
● Up to $1,000 ($2,000 if filed jointly) for Personal Property in your possession.
● Up to $1,000 ($2,000 if filed jointly) for an Automobile titled in your name.
● The Florida Bankruptcy Courts provide unlimited protection for a Florida Homesteaded Property to the extent that if the home was purchased, paid down or otherwise improved with the previous 40 months (1,215 days). If this doesn’t apply, then the maximum amount of the home that can be exempt is $137,000. Several courts have upheld that a married couple filing jointly can withhold $274,000.
● $4,000 ($8,000 if filed jointly) in Personal Property if you have no homestead. This is called the “Wildcard” exemption
A Chapter 7 Bankruptcy is a Consumer bankruptcy whereby an individual gets a complete “discharge” from all their unsecured debts he or she may owe (possibly secured debts too). Essentially, an individual obtains complete relief and forgiveness from his/ her debts (100%). It is also a liquidation of any “non-exempt” assets. For this reason, a Chapter 7 Bankruptcy is generally reserved for individuals with low income and limited assets.
People attempting to file a Chapter 7 Bankruptcy have two ways to qualify in terms of income:
1. If you are at or under the median income, then you will qualify; or
2. If you are above the median income, then a person can possibly qualify through the means test
○ The means test is a mathematical equation that an attorney will conduct to determine if the person may qualify
○ Income limitations
○ Social Security Income (SSI) & Social Security Disability Income (SSDI) are not considered income in a determining if someone qualifies through the median income standard.
Median Family Income Qualifiers based on family size:
1 Person Home $3,136
2 Person Home $53,654
3 Person Home $57,080
4 Person Home $66,588
5 Person Home $74,988
6 Person Home $83,388
Each additional person add $8,400
Typical debts that can be discharged in a Chapter 7 Bankruptcy are:
Pay Day Loans
Unpaid Rent or Utilities
Q: How many years need to have passed between Chapter 7 filings?
A: 8 years
Q: Is there a residency requirement?
A: Yes, you must reside in Florida for 91 consecutive days prior to filing.
Q: How long do I need to be a resident of Florida to qualify for the Florida Exemptions?
A: You must reside in Florida for 2 years to qualify for the Florida exemptions.
Q: Do I have to attend Court?
A: Yes, each filer must attend the 341 meeting of the creditors approximately 30 days after filing.
Q: Can I take my pre-filing credit counseling and post filing debtor education online?
Q:When is the bankruptcy over?
A: The process typically takes 4-5 months from the date of filing to complete (Discharge).
Q: Are there debts that cannot be discharged?
A: Yes, Debts that cannot be discharged during bankruptcy are referred to as “secured debt” or “non-dischargeable debt,” and include: Student Loans, Child Support, Alimony, Court Fines, Criminal restitution, damages resulting from personal injury that involved alcohol or drugs, parking tickets and most debts to the government.
Q: Will a bankruptcy stop my wage garnishment?
A: Yes, once you file for bankruptcy (not once you hire an attorney) the wage garnishment should stop.