Will I lose everything if I file for Chapter 7 bankruptcy?
On behalf of Furr & Cohen, P.A. posted in chapter 7 on Friday, February 26, 2016.
If you are struggling with unmanageable debt, you have likely already started exploring your options for bankruptcy protection. This is certainly an option for many people, but it is important that you understand what you qualify for and what different types of bankruptcy mean before deciding what to do.
Unfortunately, there are many misconceptions about this process that lead people to make unwise decisions. For instance, some people avoid filing for Chapter 7 bankruptcy because they believe that doing so will mean they will lose everything they own. However, that is generally not the case.
Before we discuss the assets and wages that can be protected from liquidation in Chapter 7 bankruptcy, we want to briefly remind readers of what Chapter 7 bankruptcy is. Broadly speaking, in Chapter 7, debts are either discharged completely or your assets can be seized to pay them down. While this can be a very effective way of making a fresh financial start, it is also quite aggressive.
However, while you may lose some of your property during this process, many people are able to protect much of their property thanks to Florida bankruptcy exemptions.
For instance, you will likely keep your home. In this state, homes valued at any amount can be exempt from bankruptcy proceedings as long as you live there and have owned it for a certain amount of time.
Other exemptions include portions of your disposable earnings, pensions, medical savings accounts, disability benefits as well as cars and other personal properties, up to a certain value.
These exemptions are in place so that a person is not left with nothing after filing for bankruptcy. You should still be able to have the basic essentials necessary to rebuild your financial life and move forward. While it can certainly be upsetting to lose other assets or money, you should know that you will not lose everything.
If you are in a situation where you are considering filing for Chapter 7 bankruptcy protection, it can be crucial that you first discuss your options and rights with an attorney. Failure to do so could lead to costly mistakes and oversights that only complicated matters further.