Bankruptcy is administered only at the federal level in the United States Bankruptcy Court per United States Constitution Article 1, Section 8, Clause 4.
Chapter 7 - basic liquidation for individuals and businesses, Called straight bankruptcy or simple bankruptcy lets debtors eliminate most or all debts with only student loans and child support and some tax bills and criminal fines. Credit cards, pay day loans, personal loans, medical bills and most other bills are discharged. 91% hire an attorney and the cost is $1,170.00. To qualify for Chapter 7 the "means test." If the "means test" is met, a trustee sells most of the debtor's assets with some assets protected including Social Security payments, car or truck, some household goods and appliances, and others.
The "means test" is employed in cases where an individual with primarily consumer debts has more than the average annual income for a household of equivalent size, computed over a 180-day period prior to filing. If the individual must "take" the "means test", their average monthly income over this 180-day period is reduced by a series of allowances for living expenses and secured debt payments in a very complex calculation that may or may not accurately reflect that individual's actual monthly budget. If the results of the means test show no disposable income (or in some cases a very small amount) then the individual qualifies for Chapter 7 relief. An individual who fails the means test will have their Chapter 7 case dismissed, or may have to convert the case to a Chapter 13 bankruptcy. See https://en.wikipedia.org/wiki/Bankruptcy
Chapter 11 - rehabilitation or reorganization mainly used by business debtors and individuals with substation debts and assets
Chapter 13 - rehabilitation with a payment plan for individuals with a regular source of income.
Using Bankruptcy Exemptions to Protect Cash
When you file for Chapter 7 bankruptcy, you agree that in exchange for a bankruptcy discharge, the bankruptcy trustee appointed to administer your matter can take property to pay back unsecured creditors. But, if an item of property or an amount of money is exempt under the bankruptcy exemption laws, you can keep it.
The exemptions available to you will depend on the law in your state. Some state exemptions specifically cover an amount of cash (although they're often minimal, for instance, $300). Other states have wildcard exemptions or general personal property exemptions that allow you to protect any type of property up to a certain dollar limit, including cash.
Example. Suppose that your state doesn't exempt cash, but has a $3,000 wildcard exemption. You have $4,000 in cash. You can protect $3,000 using the wildcard exemption but will probably have to turn over the remaining $1,000.
Cash That Might Be Exempt
Here are some examples of cash (or assets readily converted to cash) that could have additional bankruptcy exemption protection:
- IRs or other exempt retirement accounts or benefits
- wages
- unemployment benefits
- public assistance
- cash or bank balances
- Social Security proceeds (as long as they're held in a separate bank account—these funds lose their protection when comingled with money from other sources), and
- personal injury proceeds.
Cash That Won't Be Exempt
As a general rule, if you sell exempt property before you file for bankruptcy, the cash proceeds usually lose the exemption protection. For instance, if you're entitled to a $2,500 motor vehicle exemption, and you sell your car before filing for bankruptcy, the sale proceeds cannot be claimed as exempt under the motor vehicle exemption.
But this isn't always the case. For instance, some state's homestead exemptions allow you to protect home sale proceeds for a particular period. Also, Social Security proceeds retain their exempt status as long as they can be traced back to their source (for instance, if you deposit the Social Security funds in an exclusive-use bank account).
Martin County Florida is in the United States Bankruptcy Court Southern District Florida - Web site of this court is https://www.flsb.uscourts.gov/
Filing a Chapter 7 Case - Effective 12-01-2020 from United States Bankruptcy Court Southern District Florida - see https://www.flsb.uscourts.gov/filing-chapter-7-case-effective-12-01-2020
See Documents Due at Time of Filing of Bankruptcy Petition
See Documents Due Within 14 Days of filing for Chapter 7
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