Chapter 7

William M. Reed was admitted to practice law in the United States Federal Courts in the summer of 1990 and he has represented thousands of persons seeking financial relief from unexpected or overwhelming debt.  Mr. Reed has always sought to advocate fiercely on behalf of his clients and help them obtain the financial relief to which they are entitled under federal law.  He has filed close to three thousand cases during his career and is even more passionate about helping people from all walks of life obtain bankruptcy relief now than ever before.  Countless times, Mr. Reed has witnessed distressed and crestfallen people come to him with "unsolvable" financial problems.  He has found that intense advocacy and creative effort on the part of himself and his team have help these fine people resurrect their dignity and their dreams.  Please read on to learn about this vital and important  law:

Liquidation Bankruptcy:       
The most common kind of bankruptcy filing is called "Chapter 7 Bankruptcy"  (named after the chapter of the Federal Bankruptcy Code that governs its use.)  It is the most common type of bankruptcy and is often referred to as a “liquidation” or “straight” bankruptcy. In a Chapter 7 bankruptcy, a debtor retains all of his or her exempt assets while discharging his or her unsecured debts.  All of the debtor’s nonexempt assets may be converted to cash by the trustee in the bankruptcy court and distributed to creditors in accordance to bankruptcy rules. At the conclusion of the bankruptcy proceeding, the debtor receives an order of discharge, which wipes out his or her obligation to repay most, if not all, of his or her unsecured debts.

Most Florida residents that become Chapter 7 debtors have generous exemptions covering their property.  Generally, debtors have little non-exempt property because of Florida's liberal exemption laws. In cases where there is little or no nonexempt assets, the bankruptcy is considered to be a "no asset" case, which means the debtor doesn't lose any of his or her assets.  In cases where the debtor has some assets that are not exempt, the debtor's attorney can often negotiate with the trustee to have the debtor enter into a payment arrangement to "buy back" the non-exempt property to avoid having any of the debtor's nonexempt assets liquidated.

Chapter 7 bankruptcy is used to eliminate, or discharge, primarily unsecured debts such as credit cards, medical bills and deficiency judgments foreclosure or repossession of a secured home or car. Chapter 7 does not eliminate secured debts, such as vehicles and real property (unless the secured item is surrendered).  Chapter 7 bankruptcy can also stop a wage garnishment by a creditor, and one can discharge certain income taxes that are old enough (due to the complexity involved, one should carefully discuss possible tax discharge with your bankruptcy attorney.)

Chapter 7 will not save a house from foreclosure nor a car from repossession if you are behind in your payments.  Under the new bankruptcy law, only people who pass the "means test" may file a Chapter 7 bankruptcy. People who fail the means test have to file Chapter 13 bankruptcy provided you are under Chapter 13 debt ceilings. Your bankruptcy attorney can run a means test for you after he collects the necessary information.

In a recent ruling, the United States Court of Appeals for the Eleventh Circuit has held that it is permissible to “strip” – or have removed – second mortgage liens in Chapter 7 bankruptcy where the subject homestead property has a value less than what is owed on the first mortgage. For many borrowers this may enable them to significantly reduce negative equity by completely avoiding second, third or even fourth mortgage liens and discharging the underlying personal liability within the bankruptcy process. 

The bankruptcy lawyers at the Reed Law Firm have over 30 years combined experience filing bankruptcy in Central Florida. Contact our bankruptcy attorneys today for a free initial consultation. We would be happy to assist you. 

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