Chapter 7 bankruptcy filings are an option for those facing financial issues. Although the number of bankruptcy filings in South Florida, including business bankruptcies, were down from a year ago despite the government-mandated business closures and the plummeting travel activity some prominent companies like TooJay’s and Cinemex Holdings USA did seek Chapter 11 protection
If you’re struggling with your finances, one option is to file for Chapter 7 bankruptcy, which can provide an important safety net for those seeking relief from indebtedness. Yet, while this can be a helpful tool to aid you in controlling your debts and rebuilding your credit, it isn’t a step to take lightly and there remain both upsides and downsides to choosing the option.
Bankruptcy can have major benefits including: offering immediate relief from debt collectors, erasing most of your debts, improving your credit score, and preventing wage garnishment among others.
Florida, like most other states, has a significant number of chapter seven bankruptcy filings. For instance at the end of May 2020, the South Florida Business Journal reports that South Florida bankruptcy courts recorded 11 business filings – including seven with total debts above $1 million – during the week that ended May 22. Chapter 7 bankruptcy protection typically provides for the liquidation of a business’ assets to satisfy creditor claims (Chapter 11 protection enables a business to restructure its creditor obligations with the goal to remain a going concern.)
Those contemplating taking the Chapter 7 bankruptcy route need to weigh up the advantages and disadvantages of taking this course of action. As financial attorneys who focus upon those facing severe financial issues the Sun Coast Law bankruptcy attorney in Orlando have dealt with numerous such cases of chapter 7 applications in Florida and note that the Covid-19 pandemic has seen the bankruptcy court provide a time for creditors to use to assist the revival of their businesses.
The need for specific advise tailored to individual circumstances is vital if the appropriate course of action is to be taken, be it chapter 7 or otherwise.
Relieving Your Financial Obligations
Although there are a handful of exceptions, most of your debts will be discharged when you file for Chapter 7 bankruptcy. This means you’ll be relieved of your financial liabilities for all qualifying obligations.
What do these obligations include? Typically, they’ll cover:
- Medical bills
- Overdue rent
- Credit card debts
- Money owed under a lease agreement
- Some personal loans
- Some civil court judgments
Once these debts have been discharged, your creditors can’t take any collection action against you to recover them.
On the downside, before you can receive your Chapter 7 discharge some of your possessions have to be recovered and liquidated by a trustee appointed by the court. When you file your Chapter 7 petition, a bankruptcy trustee will take control of your estate. Any non-exempt assets such as art collections, extra vehicles, or jewelry can be sold or disbursed then those proceeds will be applied towards repaying your debts.
Your Important Assets Will Be Protected
Although some of your possessions may be liquidated in Chapter 7 bankruptcy cases, there are exemptions that enable you to keep your most important assets. These exemptions often extend to your primary residence, a vehicle under a specific value, personal effects, and many home goods. As a result, you can start afresh once you’ve come through your case since you’ll still have transportation and somewhere to live.
Qualification For Approval
Another negative when considering Chapter 7 bankruptcy is that you will need to qualify for approval. Not everybody seeking Chapter 7 protection will be approved. You’ll have to meet the eligibility requirements such as having an income below the average for the state or qualifying under means-testing. You must also have no previous bankruptcy dismissals in the last 180 days under specific circumstances and you must have completed your credit counseling within 180 days of the petition being filed.
A Rapid Resolution
A major positive of choose Chapter 7 bankruptcy is that, compared with other options for debt-relief, this option offers efficient and speedy resolution so you can move on with your life and begin rebuilding your credit. From filing the petition to finalizing the case, the process only takes around 3 to 6 months as long as there aren’t any extenuating circumstances or complexities.
When compared with a Chapter 13 bankruptcy procedure that takes between 3 and 5 years to reach completion, it’s easy to see why Chapter 7 is a more attractive option and in particular at this time with the pandemic and the need for business protection.
Sun Coast Law are specialist bankruptcy attorneys.