Credit and other types of debt can serve as useful methods of attaining one’s financial goals. However, debt sometimes gets out of control and leaves borrowers wondering if they’ll ever get their finances back on track. Luckily, there is a legal method available that relieves qualified individuals of the burden of repaying many of their outstanding debts: Chapter 7 bankruptcy. This process allows debtors in Florida to wipe their financial slates clean via the elimination of some or all of their unsecured debts. Below is an overview of how Chapter 7 bankruptcy works in Florida.

Who is Eligible for Chapter 7 Bankruptcy in Florida?

Individuals of limited means are the intended beneficiaries of Chapter 7 bankruptcy. However, one need not earn a low salary to qualify. In fact, individuals who earn significant yearly income may still be eligible for Chapter 7, because eligibility is determined via a means test that balances a debtor’s income against his or her expenses. Therefore, high-income borrowers are often permitted to file for Chapter 7 bankruptcy as long as their corresponding expenses are high enough.

How does the Chapter 7 Process Work in Florida?

Once a borrower passes the means test, all or most of his or her unsecured debt may be discharged. Following the discharge of a debt, the borrower is no longer required to pay it back, and the creditor cannot take action to collect the outstanding debt. Chapter 7 cases usually result in the discharge of all of a filer’s unsecured debts, and it typically takes 4 months from the time a bankruptcy petition is filed for a Chapter 7 case to conclude.

While Chapter 7 bankruptcy ordinarily results in the elimination of most of a borrower's unsecured debts, it is important to keep in mind that only debts accumulated prior to the date of filing for Chapter 7 may be discharged. Therefore, all new debts accumulated following the initiation of Chapter 7 proceedings must still be paid by the borrower. In addition, although Chapter 7 filers are no longer liable for their discharged debts, all liens that have not been made unenforceable via bankruptcy remain effective. Therefore, secured creditors still have the power to enforce such liens.

Debts that may be Discharged

Debts that may usually be discharged in a Chapter 7 bankruptcy case include:

• Medical bills
• Unpaid leases
• Some civil judgments
• Tax penalties  
• Some back taxes
• Some attorney fees
• Some charge accounts
• Credit card debt
• Payday loans
• Some personal loans
• Unpaid utility bills
• Bad checks
• Some auto accident claims
• Business debts

If your personal debt has gotten out of control, please contact a Florida bankruptcy attorney to discuss your situation. An experienced Florida Chapter 7 bankruptcy attorney will ensure that you understand all of your debt relief options. Please contact us for a free consultation at (866) 789-4002 or (727) 789-4000.