Chapter 7 Bankruptcy Lawyer Serving Melbourne & Brevard County

Chapter 7 bankruptcy, or “liquidation bankruptcy,” is a federal legal process that allows individuals to eliminate most unsecured debts. It also provides a mechanism for partnerships and corporations to wind down and liquidate assets under court supervision.

For individuals, the process includes debts like credit card balances, medical bills, and personal loans. In exchange, a court-appointed trustee may liquidate certain non-exempt assets to repay creditors.

For many people, Chapter 7 offers a much-needed financial reset. The process is typically quicker than other forms of bankruptcy; there is no requirement to repay your debts through a long-term plan.

To begin, you must file a petition in federal bankruptcy court. This petition includes a detailed list of your:

• Assets
• Income
• Debts
• Expenses
• Recent financial activity

Once your case is filed, an automatic stay goes into effect, immediately stopping most collection actions, lawsuits, wage garnishments, and foreclosure proceedings.

From there, a trustee is appointed to evaluate your case. This includes reviewing your financial disclosures, determining what property is exempt or non-exempt under the law, and facilitating any necessary liquidation of assets. In most consumer cases, the debtor keeps all or most of their property, depending on exemption laws.

You must also complete a credit counseling course and meet eligibility requirements through a means test, which assesses your income compared to the median income for Florida households. If your income is too high, you may be directed to file under Chapter 13 instead.

Most unsecured debts are discharged in Chapter 7, including:

• Credit card balances
• Medical bills
• Personal loans
• Utility arrears
• Certain legal judgments

Some debts are not dischargeable. These include:

• Most tax obligations
• Student loans
• Child support
• Alimony
• Debts secured by collateral, such as mortgages and car loans.

These "secured creditors" will still be named and involved in the court process.

If your lender has arranged a foreclosure sale of your home and you apply for Chapter 7 bankruptcy, the sale will be legally delayed, usually for three or four months. The lender may, however, seek permission from the bankruptcy court to proceed with the sale by filing a "motion to lift the automatic stay." If successful, you will not get the full three to four months.

Even then, the motion takes time to file and hear, so the sale will usually be delayed for at least two months, or even longer if the lender is late in seeking the motion to remove the automatic stay.

At Mann Law, we take the time to understand your unique situation and determine whether Chapter 7 is the best course of action. Our attorney provides straightforward guidance, direct access, and proven results.