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I have a friend who has been hit with hard times, and her biggest problem is a large multi credit card debt, and she is looking into filing chapter 7 to relieve that debt. She lives in Florida and still owes on a mortgage and owns two cars outright. What's the chance of her being able to keep the house and at least one of the cars while going through with the proceedings?
For a single person, the maximum income one can earn and file a Chapter 7 is $41,334. If she exceeds that limit, is restricted to a Chapter 13 filing. Florida offers a homestead exemption, so she'll probably be able to keep her home.
Most States allow an exemption of one vehicle, and I believe Florida is one such State. The auction value of vehicles is far lower than the actual retail value of the vehicle, which is a factor trustees consider when deciding whether or not to take control of a vehicle.
I have a friend who has been hit with hard times, and her biggest problem is a large multi credit card debt, and she is looking into filing chapter 7 to relieve that debt. She lives in Florida and still owes on a mortgage and owns two cars outright. What's the chance of her being able to keep the house and at least one of the cars while going through with the proceedings?
Not really. Her biggest problem is charging more money on CC's than she is able to pay. If she doesn't resolve that problem, filing Chapter 7 will only ruin her credit ... and leave her worse off than she is now.
Anyone can have an unexpected downturn chop them off at the financial knees. But in cases like this, it's proper and essential to cure the real problem instead of applying a costly band-aid to it.
She's going to lose, big time, with bankruptcy. The question is whether that's an improvement from her current, real position, and it just might be. But expecting to just get out from under a pile of consumer debt, as many bankrupts used to do and still assume they can... like curing an alky by handing them a case of liquor.
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