Personal bankruptcy attorneys in Florida typically focus on two main bankruptcy chapters: Chapter 7 and Chapter 13. These are the most common bankruptcy chapters in America; the other chapters (most notably Chapter 11) are far less common for individuals and families. A Florida bankruptcy is a legal process that offers relief from overwhelming debts the filer cannot repay.
While providing a legal avenue to gaining debt relief, filing for bankruptcy will have a significant impact on individual credit scores. Depending on the chapter filed, the record of the bankruptcy will remain on the credit report for seven or 10 years. While the bankruptcy remains on record, it can be more difficult to obtain credit cards, automobile loans, or mortgages in the future. Therefore, it is important to understand options, processes, and ramifications before getting started. Speaking with a local, experienced bankruptcy attorney is an excellent start.
The bankruptcy filing process in Florida is similar to the process in other states, following these typical steps:
- Decide whether to file Chapter 7 or Chapter 13
- Hire an attorney if applicable
- Complete the Credit Counseling Course
- File Bankruptcy Petition
- Assignment of a Florida trustee to the case
- Attend 341 Meeting of Creditors
- Complete the Second Mandatory Debt Education Course
- Receive Bankruptcy Discharge
Florida Bankruptcy: Chapter 7
Chapter 7 Overview: In Chapter 7, the filing party is at some risk of nonexempt property being liquidated and the proceeds used to pay off debts. This chapter is best for those who cannot afford to pay the majority of their debt. It’s often more affordable than a Chapter 13 bankruptcy, and it can be completed within 120 days. Chapter 7 remains on a credit report for 10 years. Any discharged debt is not required to be paid back.
To file Chapter 7 bankruptcy in Florida, individuals must take a means test, which was added to the Bankruptcy Code in 2005. Designed to mitigate bankruptcy fraud, the means test is an income requirement that determines which Chapter is appropriate. The initial portion of the means test calculates the current monthly income. If income falls below the mean income for a family of that size in Florida, the individual is likely eligible to file Chapter 7.
Click to View Median Incomes by State
Florida bankruptcy exemptions refer to property that will not be included in any liquidation or sale of assets. In Florida, the state exemptions override federal exemption guidelines. Individuals considering bankruptcy can call an attorney or check for a complete list of up-to-date Florida bankruptcy exemptions.
Florida Bankruptcy: Chapter 13
Chapter 13 Overview: In Chapter 13, debts are reorganized into a debt settlement program, and individuals are often able to protect their assets. It costs more than a Chapter 7 bankruptcy, and discharge doesn’t occur for 3 or 5 years after the repayment program is complete. Chapter 13 remains on a credit report for 7 years.
Chapter 13 bankruptcy reorganizes debt through the bankruptcy court, setting up a 3- or 5-year payment plan. One of the most essential aspects of a Chapter 13 bankruptcy is determining whether the filer can afford the plan’s payment. Several bankruptcy forms can be used to calculate the approximate Chapter 13 plan payment.
Are There Alternatives to Bankruptcy?
Bankruptcy represents one of the ways that individuals struggling with debt can find relief. However, there are other options you may wish to pursue, including:
Negotiation: A first step should always be to speak with creditors about your situation. You may be able to negotiate reduced payments or a lower interest rate.
Forbearance: Some loan servicers (such as school loans) may allow debtors to postpone payments for a specific time.
Loan Modification: Creditors may agree to change the terms of your loan to make repayment easier.
It is important for anyone considering bankruptcy to speak with a financial advisor or bankruptcy attorney to ensure they understand their options. If you are in the Sarasota area, we invite you to call the law offices of Richard V. Ellis. We have helped thousands to get back on their feet and start over.