In a Chapter 7 bankruptcy you wipe out
your debts and get a "Fresh Start". Chapter 7 bankruptcy is a
liquidation where the trustee collects all of your assets and sells any
assets which are not exempt. (see Florida Exemptions) The trustee sells
the assets and pays you, the debtor, any amount exempted. The net
proceeds of the liquidation are then distributed to your creditors with
a commission taken by the trustee overseeing the distribution.
Certain debts cannot be discharged in a Chapter 7 bankruptcy, such as
alimony, child support, fraudulent debts, certain taxes, student loans,
and certain items charged. (see Florida Exemptions) Usually, large
credit card debt and other unsecured bills coupled with few assets
typify a Chapter 7 bankruptcy filer. In the vast majority of cases this
type of bankruptcy is able to completely eliminate all of the filers
debts.
You may keep certain secured debts such as your car or your furniture or
house by reaffirming those debts. To do so, you must sign a voluntary
"Reaffirmation Agreement". However, you cannot wipe out that debt (or
discharge the debt) for another six years. In other words, if you decide
that you want to keep your house or your car or your furniture, and you
reaffirm the debt, you cannot bankrupt (or wipe-out) that debt again for
six years. You will still owe that debt and you must continue to pay it
just as you were to continue to pay it before you filed the bankruptcy.
In order to reaffirm the debt, you must also bring it current. In other
words, if you are three or four months behind, then you must pay the
back payments which are due in order to reaffirm it. You can selectively
reaffirm your debts - you can state that you wish to keep the house and
the furniture, but that you want the car and the jewelry to go back to
the respective Creditors.
Reaffirmation agreements can be set aside during the earlier of 60 days
after the agreement is filed with the Court, or upon the Court's
issuance of an Order of Discharge.
