Reasons for filing Chapter 7
Chapter 7 is effectively a liquidation. Someone filing under this chapter figuratively comes to the court and says, “here’s all my stuff, here are my debts, and here’s my income. I don’t have any assets to pay my debts and I don’t have enough income to pay off what I owe.”
In both Chapter 13 and Chapter 7, a trustee is appointed. The Chapter 7 trustee is charged with the responsibility of collecting assets, investigating transfers, if any, and scrutinizing financial records to determine the truthfulness of the bankruptcy papers.
Although it is preferable to proceed under Chapter 7 because of the quickness of completing the case, it can also be more stressful for the consumer if any potential issues exist.
When determining assets, one filing bankruptcy must list all the assets. Each state has laws that permit “exemptions”. That is, the laws allow consumers to protect assets from the reach of creditors or the trustee. In Florida, where I practice law, consumers have unlimited protection of their home and retirement plans. Unfortunately, the protection of personal property is limited to $1,000 (if own a home) or $4,000 (if don’t own a home) and $1,000 in equity in a car. Reach out to the office today at 561-478-2500 for the legal guidance and representation you need.