Chapter 7 is designed for Debtors in financial difficulties that do not have the ability to pay their existing debts. Debtors whose debts are primarily consumer debts are subject to a Means Test designed to determine whether the case should be permitted to proceed under Chapter 7. If your income is greater than the median income for your state of residence and family size, creditors and the Office of the United States Trustee may have the right to file a motion requesting that the Court dismiss your case under 11 U.S.C. § 707(b) for substantial abuse of the bankruptcy process. It is up to the Court to decide whether the case should be dismissed.
In Florida, in a Chapter 7 case, you may claim certain property as exempt under governing state law. A Trustee may have the right to take possession of, and to sell, the remaining property that is not exempt, and to use the sale proceeds to pay your creditors. However, you also have the right to “re-purchase” your non-exempt interests in your property, by either a lump sum payment, or, under certain circumstances, payments remitted over a short period of time (generally, no longer than a year).
The purpose of filing a Chapter 7 case is to obtain a discharge of your existing debts. If, however, you are found to have committed certain kinds of improper conduct described in the Bankruptcy Code, the Court may deny your entire discharge or the discharge of certain debts, and, if it does, the purpose for which you filed the bankruptcy petition will be defeated.
Even if you receive a general discharge, some particular debts are not discharged under the law. Therefore, you may still be responsible for (1) most taxes and student loans; (2) debts incurred to pay non-dischargeable taxes; (3) domestic support and property settlement obligations; (4) most fines, penalties, forfeitures, and criminal restitution obligations; (5) certain debts which are not properly listed in your bankruptcy papers; and (6) debts for death or personal injury caused by operating a motor vehicle, vessel, or aircraft while intoxicated from alcohol or drugs. Also, if a creditor can prove that a debt arose from fraud, breach of fiduciary duty, or theft, or from a willful and malicious injury, the bankruptcy Court may determine that the debt is not discharged.
Further, the Court can deny the Debtor’s entire discharge. This can occur if the Debtor fails to disclose all of his assets, transfers assets prior to filing to keep them out of the reach of creditors and the bankruptcy estate, and for certain other reasons described in the Bankruptcy Code.