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Chapter 7 bankruptcy usually involves the repayment of all or a portion of a debtor’s outstanding debts via the asset liquidation process. However, the law allows Chapter 7 filers to keep certain exempt property. Exempt property, as the name implies, is shielded from the bankruptcy process and may not be forcefully sold to pay back creditors. In addition to federal exemption guidelines, every state has laws identifying the kinds of property that may be exempt from the bankruptcy process. Depending on the state, debtors may either utilize federal exemptions, state exemptions, or a combination of the two.

When a Chapter 7 debtor owns no nonexempt assets, he or she loses no property over the course of the bankruptcy case. Such cases are known as “no-asset” bankruptcies. In fact, the majority of Chapter 7 bankruptcies fall into this category. In a no-asset bankruptcy case, the bankruptcy trustee files a no-asset report and the filer’s creditors are put on notice that they will not receive any financial compensation from the bankruptcy. This lack of available property tends to result in a quicker, less complicated process than a bankruptcy involving multiple nonexempt assets.

The No-Asset Bankruptcy Process

As described above, a no-asset case is simply a Chapter 7 bankruptcy in which the debtor doesn’t lose any property through the process of liquidation. Therefore, the filing procedures are the same for both no-asset and Chapter 7 bankruptcies. Below is an overview of the no-asset bankruptcy process in Florida:

  1. Chapter 7 petition – Chapter 7 bankruptcy is initiated via a petition filed with the court. In order for a bankruptcy petition to be approved, the court requires that all filers pass what is known as a “means test” and take a credit counseling class.
  2. Automatic stay – After a Chapter 7 bankruptcy petition has been filed in Florida, an automatic stay goes into effect. The automatic stay prevents collection efforts during the pendency of the bankruptcy case.
  3. Meeting of the creditors – Every debtor who files a Chapter 7 bankruptcy petition is required to attend a meeting with his or her creditors. During this meeting, the debtor answer questions concerning his or her financial situation.
  4. Discharge of the filer’s debts – Upon the conclusion of the Chapter 7 bankruptcy case, the majority of the debtor’s outstanding debts are discharged.

Florida Bankruptcy Attorneys

Chapter 7 bankruptcy provides Florida debtors with an effective means of rebuilding their financial futures. However, it can be extremely difficult to navigate the Chapter 7 process alone. Therefore, if you are considering filing for Chapter 7 bankruptcy in Florida, please contact the Law Offices of Jeffrey A. Herzog, P.A., to discuss your situation. Our experienced Florida Chapter 7 bankruptcy attorneys will walk you through the bankruptcy process while ensuring that you understand all of your legal options. Please contact us for a free consultation.