Fort Myers, FL – The Real Facts About Chapter 7 Bankruptcy | Ask Our Attorney

Chapter 7 bankruptcy is known as a liquidation bankruptcy. That means any non-exempt property can be sold as part of the settlement with your creditors. Not everyone is eligible to declare Chapter 7 bankruptcy, so one of the first things ZinnLaw will do for you is see which type of bankruptcy is best for you to file.

Your first step in preparing for any type of bankruptcy is to gather proof of your income over the past 6 months. Pull together copies of your tax returns and the past six months of pay stubs. We will use it to fill out information on the Means Test. The Means Test is a comparison test which compares your income to the average income of households in Florida. To qualify for Chapter 7, your average income generally must be below the median income in Florida. However, you can earn a significant monthly income and still qualify for Chapter 7 if you have a lot of expenses such as a high mortgage payment or car loan payment, taxes, or medical expenses. So even if your income exceeds the median income, you can still qualify for Chapter 7 bankruptcy relief by completing the second section of the Means Test, which is about disposable income. Disposable income is the amount that remains after subtracting allowed bankruptcy expenses from your monthly gross income. The other information you must gather is a list of your monthly living expenses. If your disposable income is below a certain amount, you should still be able to file under Chapter 7 bankruptcy protection. If this seems a little complicated, don’t worry.  At ZinnLaw, we’ll be able to tell you which type of bankruptcy you should be filing.

The good news is, if you file for Chapter 7 bankruptcy, you can expect your case to be discharged four months after filing. That means that most or all of your debts have been erased and you have a fresh start on your credit, which is one of the biggest advantages to filing for bankruptcy. Most people who file for Chapter 7 do not even have to worry about having property sold to pay their debts because they do not have enough assets for this to happen. These are referred to, simply enough, as “no-asset cases.” 

After we put your income through the Means Test, Filing for bankruptcy in Florida starts by us filing your bankruptcy paperwork with the court on your behalf. You’ll have to gather a wide array of information that includes your total assets and liabilities; your total income and expenditures, broken down on a monthly basis; and a full list of creditors. The two most common types of bankruptcy are Chapter 7 and Chapter 13, and we can steer you in the right direction to make sure which type is best for your situation.

Our experienced bankruptcy attorneys at ZinnLaw will analyze these numbers and determine your candidacy for Chapter 7 bankruptcy. Once your petition has been filed, a subsequent “meeting of creditors” will be held. This meeting often consists of just a phone call and takes place within 40 days of the filing date. Don’t let this meeting intimidate you; creditors rarely appear at this meeting, and this should be the only official meeting or court appearance held as part of the Chapter 7 process.