Chapter 7 is a process known as liquidation bankruptcy or "straight bankruptcy". In Chapter 7 bankruptcy, a trustee sells the debtor's non-exempt assets, or unprotected assets, and distributes the net proceeds of those assets to creditors. The debtor is allowed to keep exempt assets. See Florida Exemptions.
In Chapter 7 Bankruptcy, most debts are eliminated and the debtor generally loses only non-exempt property. Certain debts, however, may be non-dischargeable, leaving creditors free to pursue collection from the debtor after bankruptcy. See Non-Dischargeable Debts.
A debtor can commence a bankruptcy case by simply filing a petition. The petition must be accompanied by the appropriate filing fee. See Fees. The most difficult part of filing a bankruptcy case is gathering together all financial information that must be filed at or near the time of filing of the petition. See Required Documents. In most cases, the minute the petition is filed, the "automatic stay" goes into effect, i.e., creditor must stop all collection activities. See Effect of Filing. However, bankruptcy debtors are required to pass a "means test" to qualify for a Chapter 7. See Means Test. Otherwise, the case will be dismissed. See Dismissal.
After the debtor files the necessary documentation, the trustee will hold a meeting of creditors to examine the debtor and make further inquiry into the possible existence of assets that could be recovered for the estate. See341 Meeting. The trustee then sells any non-exempted property of the estate or abandons it and distributes the net proceeds to creditors. If there are no assets to sell (so called "no-asset" cases), the trustee will file a "no asset" report and the debtor will be granted a discharge in 2-3 months. See Discharge.
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