How Does Chapter 7 Work?
Chapter 7 is the most common type of bankruptcy in the United States and
typically takes 3-5 months. It is also called liquidation bankruptcy because
the court-appointed trustee uses the filer’s assets to pay creditors.
However, not all of your possessions will qualify for liquidation.
Non-exempt assets will be liquidated. These typically include:
- Stocks and bonds
- Valuable possessions (e.g. heirlooms, expensive instruments, etc.)
- Second vehicles/luxury cars
- Vacation homes
Exempt assets will not be liquidated. Your exempt assets may include:
- Vehicles (unless they exceed a certain value)
- Clothing, household appliances, and furniture
- Pensions and public benefits
- Tools for your professional trade
- Certain portions of your equity (although the court may place a lien on
During this process, you will likely need to complete bankruptcy counseling
and a financial management course. You will also need to attend the Meeting
of Creditors, at which you will explain your situation and why you need to file.
Who Can File Chapter 7 Bankruptcy?
To qualify for Chapter 7, you will need to pass the
means test. The means test determines whether you are eligible for Chapter 7 by assessing
your monthly income, expenses, and level of debt. If your income is too
high, the court will decide you are capable of paying your debt in full
or, if necessary, reorganizing it through
Chapter 13. Generally, you will pass the means test if your income is less than the
median income of your state.
Chapter 7, therefore, may be best for you if you have a very low income.
Furthermore, you should either have few non-exempt assets or be willing
to lose them through liquidation.
Other requirements for Chapter 7:
- You must be an individual, a married couple, or a small business owner.
- You have not had a bankruptcy discharge via Chapter 7 in the last 8 years.
- You have not had a recent bankruptcy discharge via Chapter 13 in the last 6 years.
- You have not had a bankruptcy dismissal in the last 180 days.
- You must attend a credit counseling course 180 days before your discharge.
Call Our Fort Lauderdale Chp. 7 Lawyer at (954) 516-2566
Deciding whether Chapter 7 is right for you will be a challenge without
years of experience and training. At LSAS Law, our team is armed with
the knowledge and resources needed to assist you during this trying time.
If you are unsure whether bankruptcy is the best option, or you need a
dedicated advocate by your side, we are the team for you.
(954) 516-2566 to begin with a complimentary consultation with our Chapter 7 attorneys
in Fort Lauderdale.