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The basics of chapter 7 bankruptcy

Despite the growing economy in various states, including Florida, many individuals still struggle with personal debt. Some debtors may become overwhelmed with the details of filing Chapter 7 bankruptcy, as such a case has its own set of advantages and disadvantages. Nevertheless, Chapter 7 bankruptcy may allow individuals to keep property and other exempt assets.

The United States Bankruptcy Court of the Middle District of Florida offers information on Chapter 7 bankruptcy. A debtor may be required to surrender all assets to a trustee in Chapter 7 bankruptcy; the Bankruptcy Code and Federal Rules of Bankruptcy Procedure gauge which chapter an individual is able to file. The following factors can determine whether an individual files Chapter 7 bankruptcy:

  • The Debtor has insufficient income to pay a portion of his/her debts
  • The Debtor is not seeking to keep non-exempt property
  • The Debtor completes a credit counseling course with an approved agency (guidelines may vary)   

Florida's economy is growing faster than other states, but according to the National Bankruptcy Forum, many of the state's residents have turned to bankruptcy as a result of staggering financial security. Although Chapter 7 bankruptcy can come with many challenges, those who have lived in Florida for two years or more can file cases under Florida bankruptcy laws, which are free of federal exemptions. The Forum also points out that in bankruptcy, the Florida homestead exemption offers a primary residence of unlimited value protection from creditors if the debtor has been a Florida resident for at least 40 months. In these cases, the debtor's property must also be smaller than half an acre in a municipality or 160 acres elswhere.   

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