At the Johnson Law Firm, P.A., we represent individuals and married couples in Chapter 7 bankruptcy matters. We take the time to explain how Chapter 7 works, and how it can help you obtain a fresh start. To find out if you qualify for Chapter 7, take our free online evaluation or call (904) 652-2400 to schedule a free consultation.
In addition to eliminating debt, Chapter 7 Bankruptcy typically allows you to keep all of your property. A common misconception is that you will lose your primary residence or your motor vehicle if you file for Chapter 7 Bankruptcy. Contrary to that belief, you may keep your primary residence and your motor vehicle provided you are current on the payments at the time of filing Bankruptcy and you agree to continue making payments to the secured creditor by executing a reaffirmation agreement.
You are also entitled to claim “exemptions,” which are things that the trustee and creditors cannot take from you. You may protect all of the equity in your primary residence provided you meet certain residency requirements. If you choose to exempt the equity in your primary residence, you may also exempt up to $1,000 of equity in any personal property, such as household goods and furnishings, appliances, electronics, jewelry, antiques, collectibles, clothes, etc. If filing jointly, you and your spouse may exempt all of the equity in your primary residence and up to $2,000 in personal property.
If you do not own your primary residence, or if you do but choose to surrender it, you may exempt up to $5,000 worth of personal property. If you and your spouse do not own your primary residence or if you do, but choose to surrender it, you may exempt up to $10,000 worth of personal property.
However, not all personal property counts towards those limits. For example, each debtor may also exempt up to $1,000 of equity in his or her motor vehicle, as well as all of his or her interests in 401(k)’s, I.R.A’s, pensions, annuities, and life insurance policies with cash surrender value.
There are many ways of valuing property. However, the value of assets in a Bankruptcy are set at “replacement value.” Replacement value is defined in the Bankruptcy Code as the price that a retail merchant would charge for property of the same kind, considering the age and condition of the property at the time its value is determined. This is not the cost to replace the item with a new one or what you could sell the item for; it is the cost that a retail merchant would sell the used item in its current condition for. In many cases (particularly used clothing, furniture, computers, etc.), this would be yard sale value, or what the item would sell for on eBay. In other cases, such as jewelry, antiques or collectables, it may be retail value. For motor vehicles it would be the third-party purchase value. For real property, it is what the real property would sell for, at current Market value. For cash and bank accounts, it is the actual amount on deposit. For stocks and bonds it is their market value as of the date your case is filed. You must make a reasonable inquiry to determine the “replacement value” of your assets.
Indeed, the majority of Chapter 7 Bankruptcies are “no assets cases,” meaning the debtor ends up keeping the primary residence and all other personal property. Exemption laws are complicated. We recommend that you consult with the attorney to determine what assets may be claimed as exempt.
If done correctly you can complete the process and receive your discharge in as little as 4-6 months from the time of filing. The discharge is a Court Order stating you are no longer legally obligated to pay certain debts.
To find out if you qualify for Chapter 7, take our free online evaluation or call (904) 652-2400 to schedule a free consultation. We also assist clients with filing bankruptcy under the Chapter 13 bankruptcy laws.
The hiring of a lawyer is an important decision that should not be based solely on advertisements. Before you decide, ask us to send you free written information about our qualifications and experience.
We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.