When you are filing for bankruptcy in Florida, you should be aware that the filing procedure falls under federal law and not Florida state law. It means you need to unwind the contracts between you and your creditors to make new beginnings.
However, Florida’s laws play a significant role too because they determine the property an individual can protect in their bankruptcy case. You also need to be familiar with Chapter 7 and Chapter 13 bankruptcy. Let’s find out more.
How to Choose the Right Bankruptcy Chapter in Florida
Don’t worry if you don’t know the difference between Chapter 7 and Chapter 13 bankruptcy. Here is a brief description of each of these.
Chapter 7 bankruptcy
Generally, Chapter 7 bankruptcy is a filer’s first choice for numerous reasons. First, it’s quick and you can complete the process within a few months. Second, it’s affordable. You don’t have to pay any money to the creditors. This type of bankruptcy works well for people whose property has all the essential items they need to work and live.
However, if you own too many luxury items, you may have to lose some of them. For example, you may need to give up your baseball card collection or your vehicle. You don’t get any payment plan option in Chapter 7 to catch up on late car or mortgage payments. That means, you may end up losing your car or home in case you are behind while you file for bankruptcy.
Chapter 13 bankruptcy
Unlike Chapter 7, filers must pay creditors in Chapter 13. However, they can follow a payment plan with benefits that are not there in Chapter 7. For example, you can keep your property and save your car from repossession or home from foreclosure. In case you require time for repaying a debt you can’t discharge in bankruptcy, Chapter 13 can force a creditor into a payment plan. Some people don’t opt for Chapter 13 because it can be fairly expensive.
Does Filing Bankruptcy in Florida Take Care of Your Debts?
It’s true that filing for bankruptcy in Florida can erase many types of debts such as overdue utility payments, credit card balances, and personal/medical loans, etc. If you are willing to give up your vehicle or house, you can get rid of your car payment and mortgage.
However, you can’t discharge all debts. Any recent tax debt, domestic support arrearages are non-dischargeable debts that won’t erase away in bankruptcy. Furthermore, you can’t easily wipe out your student loans because you would have to file a separate lawsuit for that.
What are the Steps You Must Take to File a Bankruptcy in Florida?
Here is a simple checklist to give you an idea of what you need to do if you are planning to file a bankruptcy in Florida. You’ll be happy to note that you already covered the first two steps, thanks to this guide.
Bankruptcy in Florida: Checklist
- Become familiar with Chapters 7 and Chapter 13
- Check whether you will erase any debt through bankruptcy
- Determine if you can protect your property
- Evaluate whether you qualify
- Get in touch with a professional a bankruptcy lawyer
- Stop paying for qualifying debts
- Compile important financial documents
- Enroll in a credit counseling course
- Complete paperwork
- Submit all financial documents
- Participate in the 341 creditor’s meeting
- Be a part of the confirmation hearing to make plan payments, in case of Chapter 13
- File a debtor’s education course certificate
- Receive a debt discharge
Even if you file for bankruptcy, you can protect property that appears on the Federal nonbankruptcy exemption list and Florida’s exemption list. Contact us today if you want to find out more about how to protect your assets through Florida’s exemption laws when filing for bankruptcy in Florida.