Chapter 7 is a liquidation bankruptcy, which means the debtor’s assets will be sold in order to pay the debts owed. Bankruptcy is federal law; however, the Florida Bankruptcy law determines which property owned by the debtor is exempt from liquidation. Exemptions play a very important role in bankruptcy proceedings and should always be considered prior to filing for bankruptcy protection. When property is exempt it is not sold to repay creditors and remains the property of the debtor. Thus, the more property that is exempt, the more property the debtor will be able to keep after bankruptcy. Bankruptcy law can be very complex; however, a Tampa bankruptcy lawyer can help debtors navigate the bankruptcy laws and file a successful bankruptcy.
A Tampa bankruptcy attorney should always review the assets his client has to determine which assets owned by the debtor are subject to liquidation. When a chapter 7 petition is submitted an impartial case trustee will be appointed to administer the case and liquidate the debtor’s nonexempt assets. In many cases the debtor will not own any assets that are subject to liquidation. In these cases the trustee files a no asset report with the court and there will be no distributions paid to the unsecured creditors included in the bankruptcy. On the other hand, if the debtor does own assets, which are subject to liquidation creditors must file a claim with the bankruptcy court within 90 days.
When the Tampa bankruptcy lawyer files the bankruptcy petition an estate will be created. The estate will become the temporary legal owner of all the debtor’s property. The property owned by the estate can consist of all legally owned property and property the debtor has an interest in. The estate can even take temporary ownership of property owned or held by another person if the debtor has an interest in the property. Therefore, debtors should inform their Tampa bankruptcy lawyer of all property they have an interest in prior to filing the bankruptcy petition, even if the property is not entirely owned or in control of the debtor.
The chapter 7 trustee will then proceed to liquidate the debtor’s nonexempt property. Under bankruptcy law, the bankruptcy trustee has a duty to sell the assets in a manner that maximizes the sale the price of the assets. The proceeds of the sale will then be forwarded to the creditors per the bankruptcy schedule. The debtor will only receive proceeds of the liquidation if the sale results in funds in excess of what is owed to the creditors.
If you are overwhelmed with debt and contemplating seeking bankruptcy protection you should contact Florida Law Group for legal advice. Our team of Tampa bankruptcy lawyers can answer all your legal questions and provide you with legal advice throughout the bankruptcy proceedings.
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