- October 15, 2022
- Thomas Adam
- Bankruptcy
Many people view bankruptcy as a way to clear out credit card debt and other forms of unsecured debt. In fact, Chapter 7 bankruptcy in Florida can be a very effective way to do just that. However, there are some essential things to know before filing for bankruptcy.
First, it is important to understand that Chapter 7 bankruptcy cannot erase all your debt. This is because some debts are not fully dischargeable in bankruptcy. This means that some debts will continue to be owed by you. Examples of these types of nondischargeable debts include the majority of back taxes, owed child support, alimony, student loans, and judgments for damages from DUI accidents.
Second, Chapter 7 bankruptcy does not eliminate any existing rights you may have with creditors. For example, if you have a car payment, while the debt itself could be discharged, your car may still be repossessed by the creditor even after you file for bankruptcy. These types of debts are called secured debts. That is, they are debts that have collateral backing.
Third, there are unsecured debts. This includes things like credit card debts and personal loans. Unsecured debts are debts that do not have any collateral backing them, meaning that there is no property or other assets that can be seized in order to pay back the debt. This makes unsecured debts totally cleared out in a Chapter 7 bankruptcy.
Who is Eligible for Chapter 7 Bankruptcy in Florida?
Many people who are struggling financially may not be aware that they are eligible for Chapter 7 bankruptcy, as it is a less well-known option. In order to qualify for Chapter 7 bankruptcy in Florida, one must generally meet specific income requirements and have debts that exceed an amount they can repay.
The main requirement for eligibility for Chapter 7 bankruptcy is that your household income must be below the median income for your state. In Florida, the median income per family is about $50,000. If your household income is below this amount, you can get started right away with the bankruptcy proceeding.
If your income is above the state average, you may still be able to qualify for Chapter 7 bankruptcy if you have deep debt loads and can prove that you cannot pay back your debts within a reasonable timeframe. In this case, you will be asked to complete a “means test” before you can file for Chapter 7 bankruptcy. The means test is used to determine whether a debtor can afford to pay their debts. This test looks at a debtor’s income, assets, and liabilities to determine if they can pay their debts.
Is Chapter 7 Bankruptcy Right for You? Speak to an Attorney
In conclusion, bankruptcy in Florida can help to clear out credit card debt, but it is important to understand the specific requirements of your situation. If you are considering bankruptcy, be sure to speak with an attorney at our firm who can help you understand your options and make the best decision for your case.