As a Bankruptcy attorney, every day I come across people interested in learning about the Bankruptcy process. In most of these cases, they are interested in learning whether or not they would lose all of their assets after the filing of a bankruptcy case. The simple answer is that yes under Chapter 7, except that they will be able to retain only those assets that they will need in order to obtain a fresh start; under Chapter 13 they will be able to retain all their assets if they successfully complete their repayment plan.
Bankruptcy is a legal process started by an individual wishing to obtain the benefits that the Bankruptcy Code provides. For individual debtors that are two possible relieves provided by bankruptcy: (1) liquidation under Chapter 7 and (2) reorganization of financial matters under a Chapter 13 or 11. The purpose of a Bankruptcy process is two fold: (1) a new beginning for the debtor and (2) equity among creditors.
The Bankruptcy process starts with the filing of a voluntary petition, along with the filing of additional documents that have the purpose of presenting the debtor’s detailed financial situation. Once the petition is filed, the automatic stay starts. This allos for the stay of any collection effort against the debtor. Approximately 30 to 35 days after the filing, a meeting of creditors is held. In the majority of the cases, a discharge is received 90 days after the meeting.
Exempt Property:
Once the Bankruptcy process is started the bankruptcy estate is created, which consists of all interested that the debtor has in any property at the time of the filing of the petition. However, there are several types of property that is considered exempt, therefore the debtor will be able to retain them. The Bankruptcy Code provides a list of exempt property, however Florida opted out of these exemptions. In the State of Florida the following property is considered exempt:
1. Homestead: The debtor’s residential property is considered exempt, except against those creditors to whom the debtor granted an interest in the property;
2. Up to $1,000.00 of personal property;
3. Up to $1,000.00 in a motor vehicle;
4. Wages up to a maximum of $500 weekly. Once these have been deposited in a financial institution, they will remain exempt for aperiod of 6 months; and,
5. Certain benefits, retirement plans, and other non tangible assets are also exempt (e.g., alimony, child support, medical savings plans).
Bankruptcy is a right that has been granted every individual and provides the opportunity of a new beginning. Before seeking the relief that this process provides, it is important that each individual analyze his or her options and become informed about the process, including the advantages and disadvantages of the same.
For more information please send us an email at info@cplspa.com