Bankruptcy Laws and Procedures in Florida
The type of protection people choose will depend on their personal situation, their financial state, and what they want to accomplish through court protection.
Bankruptcy Filing Options
There are several types of bankruptcy among which a person can choose, but the two most common choices are Chapter 7 and Chapter 13. Those who choose to file Chapter 7:
- Want a fresh start. They are willing to liquidate most of their assets to pay their creditors. In exchange, the court discharges all of their debt and they get to start their financial lives over again.
- Want relief from creditor calls, letters and harassment. Filing for bankruptcy means creditors can no longer contact the person.
- An automatic stay from garnishments and foreclosure proceedings.
A Chapter 13 bankruptcy is a reorganization of debt. The process of filing consists of:
- The filer creating a repayment plan that will be executed over a period of three to five years.
- If the filer completes the repayment plan, the bankruptcy trustee will discharge any remaining debt and all debts will be considered paid.
Deciding between the two options depends on the circumstances. For those who want to start anew, filing a Chapter 7 is the best option. For those who want to retain assets such as their house or car, a Chapter 13 could help accomplish this. If a filer wants to try and save one's assets, he or she is allowed to file a Chapter 13 case first. Then if the payments are too much, he or she can convert the case to a Chapter 7.
Bankruptcy Filing Process
The first step in the filing process is listing all the assets and debts that are to be included in the bankruptcy. Requesting a copy of a credit report will help with gathering liabilities. The court will need this accounting to determine whether a person can file for bankruptcy, and if so, which type.
When a person files bankruptcy, creditors are informed of the proceedings. If they so choose, the creditors can petition the court to not be included in the bankruptcy or to receive a greater amount of the proceeds from the liquidation. At the Meeting of Creditors, those who are owed money make their requests. It is also a time when the bankruptcy trustee can go over the accounting of assets and debts.
After the meeting the court will make a decision about the bankruptcy. If the court rules the bankruptcy can proceed, assets will begin to be sold in a Chapter 7 case, and the first payment will be due for a Chapter 13 case. The Chapter 7 case is discharged when all eligible assets have been sold and creditors have been paid. A Chapter 13 case is discharged after all payments have been made from the repayment plan.
Filing for bankruptcy is a complicated process and it is a good idea that a person considering this route consult with a legal professional. Even the most basic bankruptcy cases have strict filing deadlines and not meeting those could jeopardize the case. Also, speaking to a legal professional is beneficial when determining what can or cannot be exempted from a bankruptcy in Florida. Knowing what can be kept and what has to be liquidated can help a person decide which bankruptcy route is the best option.