Bankruptcy is a legal process that helps debtors get out from under their financial burdens so that they can get on strong financial footing. Florida residents have options for the type of bankruptcy they may choose to pursue, and one of those types is Chapter 7 bankruptcy. This post will introduce the topic of Chapter 7 bankruptcy but does not provide any legal or financial advice.
Qualifying for Chapter 7 bankruptcy
Chapter 7 bankruptcy is often called liquidation bankruptcy. That is because when a person begins the process, they have to liquify or sell off their non-exempt property. They then can use the proceeds of the liquidation sale to pay off their creditors and eliminate their outstanding debts.
Not everyone who wants to use Chapter 7 bankruptcy qualifies for it. To qualify, a person must meet certain criteria, including:
- An income below the established threshold
- The inability to pay off their debts
- The failure to seek credit counseling
- A prior recent bankruptcy discharge
Before filing for bankruptcy it can be a good idea for a person to consult with a bankruptcy and debt relief attorney.
Bankruptcy, from start to finish
Once a person qualifies for bankruptcy, they must follow specific guidance and rules in order to reach the end of their proceedings with a discharge. They must pay applicable fees associated with their process, and they must provide the bankruptcy court with information on their assets, debts, and creditors. Their creditors must meet and discuss the debtor’s financial situation, and in the end the debtor’s obligations must be paid in some capacity and to the approval of the court.
Once a person is discharged from bankruptcy court they may not be able to secure credit and may have limited options for building their credit score. However, bankruptcy is an important process and opens doors to those who cannot overcome their debts on their own.