Overwhelming debt can feel like an endless cycle of stress and worry, especially with persistent creditor calls and the threat of lawsuits or foreclosures. For many individuals and families in Viera, FL, and across Brevard County, Chapter 7 bankruptcy offers a powerful, court-supervised path to debt relief and a much-needed fresh financial start.
At our firm, our Viera, FL bankruptcy attorneys understand the unique financial pressures facing local residents and are dedicated to guiding you through the bankruptcy process with empathy, professionalism, and local expertise. This guide will walk you through the essentials of Chapter 7, from general concepts to specific steps you can expect in the Middle District of Florida.
Bankruptcy is a federal legal process that allows individuals or organizations to eliminate or repay some or all of their debts under the supervision of a federal bankruptcy court. The primary goal is to provide honest debtors a "fresh start" by relieving them of overwhelming debt they cannot repay. The two most common types of consumer bankruptcy are Chapter 7 (liquidation) and Chapter 13 (repayment plan).
Chapter 7, often called "liquidation" bankruptcy, is the most common form of bankruptcy in the United States for individuals. It involves the appointment of a bankruptcy trustee who may sell (liquidate) some of your non-exempt property to pay off unsecured creditors. In most consumer cases in Florida, careful use of state exemptions allows debtors to protect all their property. The ultimate goal of Chapter 7 is to obtain a discharge of debt, a permanent court order that releases you from personal liability for most unsecured debts, such as credit card bills and medical expenses.
To be eligible for Chapter 7 bankruptcy, you must pass the Means Test. This test is designed to determine if your income is low enough to qualify for Chapter 7 relief, preventing abuse of the system by those who can afford to repay their debts through a Chapter 13 plan.
The first step compares your average monthly income over the past six months to the median income for a household of your size in Florida. If your income is below the state median, you generally qualify. If it is above the median, a more complex calculation involving specific IRS-allowed deductions for living expenses determines if you have enough disposable income to pay creditors.
One of the most immediate and powerful benefits of filing for bankruptcy is the automatic stay. As soon as your petition is filed with the court, an injunction automatically goes into effect, halting most collection activities by creditors.
This means:
Creditors must stop calling you.
Lawsuits, foreclosures, and repossessions are paused.
Wage garnishments and levies cease immediately.
This crucial protection provides immediate breathing room and allows the court time to assess your financial situation without the pressure of ongoing collection efforts. Note that some debts, like child support or certain tax liabilities, are not halted by the stay.
A common concern for those considering Chapter 7 is the potential loss of property. Florida law offers generous property exemptions that allow you to protect certain assets from the bankruptcy trustee. You must use the Florida state exemptions (federal exemptions are not available to Florida residents).
Key Florida exemptions include:
Homestead Exemption: Florida has an unlimited homestead exemption for your primary residence, up to one half acre within a municipality or 160 acres elsewhere, provided you meet certain residency requirements (generally owning the property for at least 1,215 days).
Personal Property: You can exempt up to $1,000 in personal property (clothing, furniture, electronics, etc.). This doubles for married couples filing jointly.
Motor Vehicle: You can exempt up to $1,000 in equity for one motor vehicle, also doubled for married couples filing jointly.
Wages: If you are the head of a family, up to $750 per week of your wages may be fully exempt from garnishment.
Wildcard Exemption: If you do not use the homestead exemption, you may claim an additional $4,000 exemption for personal property.
Retirement Accounts: Most tax-exempt retirement accounts, such as 401(k)s and IRAs, are fully protected under federal law.
Properly claiming these exemptions is essential to a successful Chapter 7 case.
Filing for Chapter 7 in Viera involves several steps in the U.S. Bankruptcy Court, Middle District of Florida.
Credit Counseling
Before you can file your petition, you are required to complete a pre-filing credit counseling course from an approved agency within the 180 days prior to filing. This course typically costs around $30 and can be taken online.
The 341 Meeting of Creditors
Approximately 20 to 40 days after your case is filed, you and your attorney will attend a Section 341 Meeting of Creditors (or 341 meeting). This is not a formal court hearing with a judge but a meeting conducted by your appointed bankruptcy trustee.
You will be placed under oath and asked questions about the accuracy of your bankruptcy paperwork, assets, debts, and financial situation. Creditors are invited to attend, but they rarely show up, especially in consumer cases. The meeting is usually brief if all documents were filed correctly and there are no complex issues. The court for the Middle District of Florida may hold these meetings virtually via Zoom.
Debtor Education Course
After the 341 meeting but before your debts are discharged, you must complete a second financial management instructional course (debtor education). Failure to complete this course will result in the denial of your discharge.
Reaffirmation Agreements
If you have a secured debt (like a car loan or mortgage) that you want to keep paying and the property securing it, you may need to enter into a reaffirmation agreement. This is a legal agreement to continue paying the debt despite filing for bankruptcy, making the debt enforceable again. Your attorney can advise if this is a necessary or wise step for your specific situation.
The Discharge Injunction
The end goal of Chapter 7 is the discharge injunction. This is a permanent court order, typically issued about 90 days after the case is filed, releasing you from personal liability for most of your debts. After the discharge, creditors are legally prohibited from taking any further collection action against you.
Filing for Chapter 7 bankruptcy does not ruin your credit forever. While the bankruptcy filing remains on your credit report for up to 10 years, most clients in Viera see their credit scores rebound significantly within 12 to 24 months of discharge.
By managing new credit responsibly, using secured credit cards, and making all payments on time, you can rebuild your financial life effectively. Many firms provide resources and guidance on how to start this rebuilding process immediately after your case is discharged.
If you are facing overwhelming debt and live in Viera, Rockledge, Melbourne, or anywhere in Brevard County, a free consultation with an experienced local attorney can help you determine if Chapter 7 is the right path for you.
Contact our Viera bankruptcy attorneys today to explore your options for a fresh financial start.