A chapter 7 bankruptcy is a legal liquidation. Many people refer to it as the "fresh-start" bankruptcy. In a chapter 7 bankruptcy, a consumer lists all of his or her assets in the petition, values them on a garage-sale basis, and protects them up to certain dollar amounts using laws called exemptions.
The most widely used (and therefore important) exemptions in Florida are as follows:
- Homestead (unlimited unless home purchased in last 3 1/3 years, then $125,000.00)
- Automobile ($1,000.00 per debtor)
- Household Goods & Furnishings ($1,000.00 per debtor)
- IRA / 401k ($1,000,000.00 / unlimited)
- Life Insurance (unlimited) Annuities (unlimited)
- Social Security & Pensions (unlimited)
- Wild Card (Additional $4,000.00 per debtor if no homestead)
This is a partial list of exemptions and is not intended to be an exhaustive list. You should consult with a local attorney to go over the exemptions in greater detail and to understand how certain facts could give rise to fraudulent transfer concerns and could thereby limit if not altogether eliminate the above listed asset protection amounts.
Finally, the debtor will also list his or her liabilities, his or her intentions with regard to secured assets and disclose certain transactions that the debtor has engaged in in the relatviely recent past. After your case is filed, the debtor must attend one hearing, popularly called the "341 Meeting of Creditors," named after the bankruptcy code section that requires it. After this three to five minute hearing, the debtor must then take one last class to obtain his or her Certificate of Debtor Education (taken on-line or over the phone) and you are done! You should typically receive your discharge, signed by the judge, in three to four months.
It should be noted, the above described process is a brief, non-exhaustive explanation of the average chapter 7 consumer bankruptcy. It is NOT intended to offer legal advice, create any attorney-client privilege with anyone, or predict your particular, individualized case in any manner.