Bankruptcy

Filing bankruptcy is an important decision and it should not be made without first speaking to an experienced Attorney who can give you all of your options. Although it is not ideal to have to file bankruptcy, it can be life changing and ultimately allow you and your family a fresh start. There are two types of individual bankruptcy, Chapter 7 and Chapter 13.

CHAPTER 7

Bankruptcy under Chapter 7 of the U.S. Bankruptcy Code is a serious step. In an "asset bankruptcy," a trustee of the court will sell off non-exempt assets to pay creditors. But in reality, most Chapter 7 proceedings are classified as "non-asset" bankruptcies, meaning the debtor has no qualified assets and can discharge debt through the court with little or no payment to unsecured creditors.

Filing the bankruptcy petition will immediately stop collection calls and most other collection actions. If you are hounded by collector’s telephone calls, these will stop once a bankruptcy petition is filed.

An appointed trustee will set up a meeting with you and your creditors and you will be required to truthfully answer questions about your finances and ability to repay the debts owed. If it is determined that you meet the requirements for Chapter 7 Bankruptcy, the trustee will liquidate assets. In Florida you may be able to retain your home, car and other exempted assets. A Chapter 7 Bankruptcy takes about five months before your debts are "discharged" or taken away. Creditors will not ever be able to come after you for the discharged debts. But there are some debts that won’t go away with a bankruptcy, including some taxes, alimony and child support, and most student loans.

Chapter 7 Bankruptcy can also be filed for corporations, partnerships and sole proprietorships. It is similar to personal bankruptcy in that the business assets are liquidated to pay creditors.

For more information regarding Chapter 7 Bankruptcy please contact our firm to schedule a free initial consultation.

CHAPTER 13

The federal laws on bankruptcy are designed to help people who can’t pay their creditors, allowing them to erase their debts and reclaim their financial lives. Bankruptcy can also give people a longer period of time to pay their debts without being hassled by creditors. People who are making money but can’t pay their bills and debts might want to consider filing Chapter 13 bankruptcy, because it buys time to pay bills under an affordable repayment program. With this type of bankruptcy, a person who declares bankruptcy is allowed to pay off or partially pay their debts over time and at a rate they can afford while staving off the collection efforts of their creditors.

The range of the repayment plan is typically three or five years, depending on your income. Once a person files a petition for Bankruptcy under Chapter 13 of the U.S. Bankruptcy Code, collection calls should stop as will most garnishments of wages and any foreclosure proceedings. A Trustee is appointed who will sort out your debts and help determine who is owed. A Trustee will hold meetings between the person (or couple) who files the Chapter 13 bankruptcy and representatives of the companies or individuals who are named as creditors. This meeting will help determine how much the person owes, how much he or she can pay back and in what time frame.

After the creditors meeting, there is a court hearing on the repayment plan. Under the plan, the person makes payments to the Trustee – usually every other week or once a month. The Trustee pays the creditors according to the plan which could be for less than the money they are owed. Debts such as taxes or the costs of the bankruptcy proceedings are called "priority debts," and are therefore paid first. Next are "secured debts" which have property (a car, land, etc.) as collateral. And the last in line are unsecured debts like store credit cards.

People without regular income should consider Chapter 7 Bankruptcy. In that type of bankruptcy debts may be completely discharged – meaning the person will never be held responsible for paying borrowed money back. Each person’s financial situation determines what type of bankruptcy filing is best suited for their situation.

For more information regarding Chapter 13 Bankruptcy please contact our firm to schedule a free initial consultation.