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What Is Chapter 7 Bankruptcy?
Also known as liquidation (converting assets into
money)
or a straight bankruptcy, Chapter 7 bankruptcy is the most
popular form of bankruptcy filing. Chapter 7 is the fastest
and easiest ways for a debtor to emerge out of a financial
crisis and start anew. Under Chapter 7, all non-exempt property
of the debtor is sold by the Bankruptcy Trustee and the proceeds
of the same are distributed to the debtor's creditors. In many
cases debtors do not lose any of their essential property due
to applicable property exemptions and the fresh start takes place
relatively fast.
Exempt property is property that the debtor can
protect from liquidation. The Bankruptcy Code allows each state
to adopt its own exemption laws, which apply instead of the federal
exemptions. Florida has one of the most comprehensive and debtor
friendly list of exempt property of any state in the country.
The most important exemptions for most Florida residents
include the following:
- Homestead property
- Reasonably necessary household goods and furnishings
- Household appliances
- Motor vehicles, up to a certain value
- Pension and 401K retirement funds
- Workers' compensation awards
- Prepaid college funds
- Supplemental Security Income (SSI) or disability
income
All of these exemptions apply with certain
limitations and up to certain predetermined levels.
If you have questions about what property
you will be allowed to retain if you file for bankruptcy under
Chapter 7 of the Bankruptcy Code, it is important to seek the
counsel of a knowledgeable attorney. We are here to help you at
Carrillo and Carrillo, P.A.
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