Most Chapter 7 cases take from four to six months to complete. It might take longer if any number of things happen, such as you need to provide more information or documents, the bankruptcy trustee must sell property, or you’re involved in a bankruptcy-related lawsuit.As long as the bankruptcy appears on your credit report it will have an impact on your credit scores, even after it has been discharged. A Chapter 7 bankruptcy will appear on your credit report for 10 years from the date it was filed.A Chapter 7 bankruptcy is a proceeding under federal law in which the debtor seeks relief from creditors. In such a case, the debtor must turn his or her nonexempt property, if any exists, over to a trustee, who then converts the property to cash and pays the debtor's creditors. Most chapter 7 cases are no asset cases which means that all the property owned by the debtor is exempt under state law. The most common Florida bankruptcy exemptions include:
- Homestead property (Up to 1/2 acre in a city and 160 contiguous acres in the unincorporated county)
- Personal property exemption. If you own a home, this exemption is limited to $1,000, otherwise, it is limited to $4,000.
- Vehicle. Up to $1,000.
- Wages. The earnings of a person who is head of household are exempt.
- Retirement accounts. Your IRA, 401k, pension, and similar retirement accounts are exempt under section 222.21(2)(a) of Florida law.
Chapter 13 may provide a debtor with bankruptcy protection even if they make too much money to qualify for a Chapter 7 case or if he received a discharge in a prior Chapter 7 case. It allows a debtor the length of the plan to pay back past due amounts owed on houses, cars and other loans that have collateral. Chapter 13 also allows a debtor to pay past-due income taxes and domestic support obligations like child support and alimony over the three to five year Chapter 13 payment plan. Chapter 7 is a liquidation bankruptcy that wipes out most of your general unsecured debts such as credit cards and medical bills without the need to pay back balances through a repayment plan while Chapter 13 is a reorganization bankruptcy designed for debtors with regular income who have enough left over each month to pay back at least a portion of their debts through a repayment plan. Lien stripping is a tool available for homeowners filing for Chapter 13 whose first mortgage balance exceeds the worth of the home. For example, let’s say an appraiser values your home at $100,000. You have pledged a first mortgage of $150,000 in addition to a second mortgage of $50,000 and a third mortgage of $20,000. You may be eligible to remove completely both your second and third mortgages. This is because the $150,000 due on your first mortgage is more than the $100,000 of the appraised value of your home.
On the other hand, you may not be eligible to lien strip a second mortgage if an appraiser values your home at more than your first mortgage amount. For example, let us assume the value of your home is $175,000 and your first mortgage is for $150,000. Since the value exceeds the amount due on the first mortgage, the second mortgage holder has some value in the property. Thus, you would not be entitled to strip the second mortgage.
However, if the first and second mortgage amounts combined are greater than the worth of your home, you may still be eligible to lien strip the third mortgage. In this case, the $150,000 of the first mortgage added to the $50,000 of the second mortgage equals a total of $200,000, which is $25,000 more than the value of your home. In a Chapter 13 bankruptcy plan, your third mortgage would be eligible for removal.