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Should You File for Bankruptcy in Florida? Compare Chapter 7, 13, and Alternatives

By The Golden Law Group

Florida Bankruptcy: Comparing Chapters & Exploring Options

Are you having a hard time paying your bills? You’re not alone. Many people are facing financial problems these days, and it can be stressful. If you’re overwhelmed by debt, filing for bankruptcy in Florida can help you reset your finances and get back on track.

In this article, we will talk about whether you should file for bankruptcy in Florida. We will compare Chapter 7 and Chapter 13 bankruptcy, and we’ll also look at some other options you might have.

Quick Summary:

  • Bankruptcy is a legal process that helps people who can’t pay their debts. It is governed by federal law, specifically Title 11 of the United States Code.
  • Before filing for bankruptcy in Florida, consider your debt amount, income level, assets, future financial outlook, and any actions from creditors.
  • Chapter 7 bankruptcy, known as liquidation bankruptcy, can quickly erase many debts if you qualify. It involves a means test and might require selling non-exempt assets.
  • Chapter 13 Bankruptcy, also called reorganization bankruptcy, lets you keep your property and repay debts over three to five years through a court-approved plan.
  • Alternatives to bankruptcy include debt settlement, credit counseling, loan modification, and debt consolidation loans, which might provide relief without the long-term consequences of bankruptcy.

What is Bankruptcy?

Bankruptcy is like a safety net for when your debts become too much to handle. It’s a legal process that helps people who can’t pay their debts. The main purpose of bankruptcy is to give these individuals or businesses a chance to get relief from their debts and start fresh with their finances.

When Should I Consider Bankruptcy in Florida?

If you’re thinking about filing for bankruptcy in Florida, there are a few important factors to consider before making a decision. Here are some key things to think about:

Amount of Debt

Take a close look at how much debt you owe. If it’s more than you can reasonably pay back, bankruptcy might be a good option.

Income Level

Your income plays a big role in determining whether you qualify for certain types of bankruptcy. If your income is too high, you might not be eligible for Chapter 7 bankruptcy and may need to consider Chapter 13 instead.

Asset Ownership

Consider what assets you own and whether they could be at risk in bankruptcy. Some assets, like your home or car, might be protected depending on Florida’s exemption laws.

Future Financial Outlook

Think about your future financial situation. Will your income increase or decrease in the coming years? Are there any major expenses or life changes on the horizon?

Creditors and Collection Actions

Consider whether you’re facing lawsuits, wage garnishments, or other collection actions from creditors. Bankruptcy can put a stop to these actions and give you some breathing room.

Choosing the Right Bankruptcy Chapter in Florida

The decision on whether to file bankruptcy and under which chapter to file depends on your particular circumstances. This can have a big impact on your financial future. Here are the two main options:

Why Should I File Chapter 7 Bankruptcy?

Chapter 7 bankruptcy is often called liquidation bankruptcy. It’s a quicker process where many of your debts can be wiped out completely. This means you won’t have to pay them back. Here’s how it works:

Wiping Out Debts

The main goal of Chapter 7 bankruptcy is to wipe out many types of debts completely. This means you won’t have to pay them back. Some common types of debts that can be eliminated include credit card debt, medical bills, and personal loans.

Selling Assets

In Chapter 7 bankruptcy, a trustee is appointed to review your finances and sell any non-exempt assets to pay back your creditors. Non-exempt assets are things you own that aren’t protected by law. However, many people who file for Chapter 7 bankruptcy don’t have to sell any assets because their property is protected by exemptions.

Means Test

To qualify for Chapter 7 bankruptcy, you must pass a means test. This test looks at your income, expenses, and family size to determine if you have enough disposable income to pay back your debts. If your income is below a certain threshold, you’ll likely qualify for Chapter 7.

Discharge of Debts

Once your Chapter 7 bankruptcy is approved, you’ll receive a discharge of debts. This means that you’re no longer legally required to pay back the debts that were included in your bankruptcy case. However, not all debts can be discharged in Chapter 7, such as certain tax debts, student loans, and child support obligations.

Why Should I Choose Chapter 13 Bankruptcy?

Chapter 13 bankruptcy is known as a reorganization bankruptcy. This can be a good option if you have a regular income but need more time to catch up on missed payments or keep your assets. Here’s how it works:

Repayment Plan

In Chapter 13 bankruptcy, you work with the court to create a repayment plan that outlines how you’ll pay back your debts over three to five years. This plan takes into account your income, expenses, and the amount of debt you owe.

Protecting Your Property

Unlike Chapter 7 bankruptcy, Chapter 13 allows you to keep your property, like your home and car, as long as you stick to the repayment plan. This can be a big advantage for people who want to avoid losing their assets.

Court Approval

Once you’ve created your repayment plan, you’ll need to submit it to the court for approval. The court will review your plan to make sure it’s feasible and fair to your creditors.

Appointing of Trustee

During the repayment period, a trustee is appointed to oversee your case. You’ll make monthly payments to the trustee, who will distribute the money to your creditors according to the terms of your plan.

Discharge of Debts

Once you’ve completed your repayment plan, any remaining eligible debts are typically discharged, meaning you’re no longer legally required to pay them. However, some types of debts, like certain tax debts and student loans, may not be dischargeable in Chapter 13 bankruptcy.

Are There Other Alternatives to Bankruptcy in Florida?

When facing financial difficulties in Florida, bankruptcy may seem like the only solution. However, before taking such a significant step, it’s crucial to explore alternatives that may offer relief without the long-term consequences of bankruptcy. Here are some alternatives to bankruptcy in Florida that might help you get back on solid financial ground:

Debt Settlement

Debt settlement involves negotiating with your creditors to reduce the amount of debt you owe. You can try to work out a payment plan or settle the debt for a lower amount. However, debt settlement can have consequences, including potential damage to your credit score.

Credit Counseling

Credit counseling agencies can help you create a budget, manage your debts, and negotiate with creditors. They can also offer debt management plans, which involve consolidating your debts into one monthly payment.

Loan Modification

If you’re struggling to make your mortgage payments, you might be able to negotiate a loan modification with your lender. This can involve lowering your interest rate, extending the term of your loan, or reducing the principal balance.

Debt Consolidation Loans

Debt consolidation loans allow you to combine multiple debts into one loan with a lower interest rate. This can make it easier to manage your payments and pay off your debts more quickly.

Achieve Financial Freedom: Understanding Bankruptcy in Florida and Lawyer Guidance

Deciding whether to file for bankruptcy in Florida is a tough choice, but understanding your options can make it easier. Chapter 7 bankruptcy can quickly erase many debts, while Chapter 13 bankruptcy allows you to keep your property and repay debts over time. If bankruptcy isn’t suitable, alternatives include debt settlement, credit counseling, loan modification, and debt consolidation loans. Each option has pros and cons, and the best choice depends on your unique situation.

At Golden Law Group, our Brandon bankruptcy attorneys can be your guide through this challenging financial situation. We take the time to understand your unique situation and provide advice tailored to your needs. Based on your circumstances and goals, we’ll guide you toward the best course of action. Our bankruptcy law firm will guide you through the process, explain your options, and help you choose the best path for your financial future.

Contact us today for a free consultation and let us help you take the first step towards a debt-free life. We’re here to help you make informed decisions about your future. 

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