Often referred to as a liquidation, this is the most often filed form of bankruptcy. Mostly individual debtors use this chapter in order to discharge their debts while keeping a modest amount of property which may be considered “exempt”. Brodzki Jacobs handles Chapter 7 matters for individual and small corporate clients.
In a Chapter 7 Bankruptcy, a petition is filed and then a trustee is appointed to administer the debtor’s estate. There is one meeting of creditors which usually is scheduled within 30-45 days of filing. At this meeting, the debtor testifies to his/her assets and liabilities. The trustee may abandon certain exempt property at this meeting as well. If all goes well, the bankruptcy is discharged 60 days thereafter.
In Florida, a debtor can claim their homestead fully exempt if they have resided in it for more than 40 months. Further, there are exemptions for personal property and automobiles. Individual Retirement Accounts, Pensions and 401(K) accounts also may be exempt. Therefore, it is not uncommon for debtors to retain most of their property while filing a valid Chapter 7 bankruptcy.
Finally, there is a means test which is performed prior to filing any bankruptcy petition. This shows whether the debtor qualifies for a Chapter 7 or whether he/she must file a reorganization or Chapter 13 bankruptcy. In general, there are formulas based on the family size, if the debtor makes less than this amount and there personal property would be exempt by filing a Chapter 7, this would be the way to go. If not, then the team at Brodzki Jacobs would perform further analysis for the Chapter 13 bankruptcy.