At this point, we know that not everyone is eligible to file for bankruptcy under Chapter 7, we know you must complete credit counselling before you file, you must take the means test, and you must have less than $100 of income after the calculation (generally). There are exempt assets (things that do not have to be liquified by law) and non-exempt assets (things that are usually liquified during the Chapter 7 process). Did you know that exempt assets vary from state to state?
- Annuity contract proceeds excluding lottery winnings.
- Death benefits paid to a certain person and not an estate.
- Damages paid to an employee for working in a hazardous environment.
- Property of a business partnership.
- Pensions for most first responders, state employees, and teachers.
This list is not comprehensive and these assets are considered exempt in addition to the assets protected under federal law (see previous post).
Does Filing Under Chapter 7 Have Tax Implications?
In short, yes. The IRS does offer a comprehensive guide on this subject and we will be covering this topic later this week.
Do You Need an Attorney to File Chapter 7 Bankruptcy?
It is legal to file for personal bankruptcy without an attorney in the state of Florida. Instructions can be found here. However, it is a complex process and it could be very beneficial to retain the services of an attorney because they have an understanding of the law, they can explain what debts can be discharged and what assets can be exempt, and they can explain the tax consequences of filing for bankruptcy under Chapter 7.
If you are considering filing for bankruptcy under Chapter 7, consider Dsouza Legal Group. With more than 15 years navigating this incredibly complex topic, Elias Dsouza is ready to help you get a fresh start.