Chapter 7: Liquidation
The roots of Chapter 7 bankruptcy are actually biblical and found in
Dueteronomy Chapter 15. Before bankruptcy, people were put into debtors prisons until their family or loved ones could come up with enough money to pay their debts! A lot of clients who come in to speak with us are worried about filing for Chapter 7, because they are good people and want to pay their debts, and some of them find comfort in knowing that the system was put in place for a reason.
When a person files for bankruptcy under Chapter 7 they agree to have all of their possessions at the time of filing, taken by a court-appointed trustee and sold. The proceeds from the sale are then used to pay creditors. The result is a “fresh start” and all debts are discharged.
However, by law not everything you own can be taken and sold. Each state has different rules on what qualifies as being exempt from sale by the court-appointed trustee. In Florida some (not all) examples of the things you get to keep are:
- Your home (homestead)
- Insurance benefits you receive, retirement and pension funds (Ex: 401(k), IRAs, teachers, fire fighters, police, etc.)
- Any alimony or child support you receive
- Personal property up to $1,000 (husband & wife may double)
- Certain Portions of Tax Refund
- Vehicle (up to $1,000)
Contact the
Affinity Law Firm today to set up a free consultation for Chapter 7 bankruptcy.
6 comments:
Nice post, most of the people are unaware of what does the meaning of chapter 7 bankruptcy. You have explained it in very clear and understandable format. Thanks keep it up, DIY4LAW
When determining what is considered exempt, many states allow you to use the state's definition of exempt or the federal list of exempt property. Some states require you to use the state's list. Be sure to check your state's laws to find out what applies to your state. Thanks for such nice post about filing chapter 7.
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