If you are struggling with debt that you cannot repay, you may have already started thinking about filing bankruptcy. The bankruptcy process is largely misunderstood by many though, and it is not a simple process of filing papers with the court and getting your debt discharged. The process is a bit more complex and involves determining which type of bankruptcy is right for you, and then following the many different rules and proper procedures. The only way to ensure you are successful with your case is to work with a Plantation bankruptcy lawyer.
What is Chapter 7 Bankruptcy?
Chapter 7 bankruptcy is the most straightforward type of bankruptcy you could file. During a Chapter 7 bankruptcy, you can discharge most of your debt and will no longer be responsible for paying it. You will have to pass a means test showing that you do not have enough income to cover your debt. You will also have to meet with your creditors, who are entitled to place a claim on any of your property that can be used to repay the debt.
Contrary to what many people think, you do not lose everything you own during a Chapter 7 bankruptcy. You may have to forfeit some of your property so it can be sold and the proceeds distributed among your creditors. However, it is very important to realize that many borrowers do not lose anything during bankruptcy due to the generous exemptions outlined in Florida law.
What is Chapter 13 Bankruptcy?
It is possible to discharge some of your debt during a Chapter 13 bankruptcy, but most of it is restructured into a payment plan. With the payment plan, you will have three to five years to repay your debt, and the payments will be more manageable for you to make. Chapter 13 bankruptcy is a good option for those who do not qualify for Chapter 7.
Understanding the Bankruptcy Exemptions in Plantation
The bankruptcy exemptions outlined under Florida law can protect certain property during the bankruptcy process. These protections apply regardless of whether you file Chapter 7 or Chapter 13 bankruptcy, but non-exempt property is treated differently depending on the type you file.
- Chapter 7 bankruptcy: The bankruptcy trustee will determine which property is non-exempt and sell it. The proceeds are distributed among the creditors to repay the debt the borrower still owes.
- Chapter 13 bankruptcy: No property is sold, but the borrower must pay the value of the non-exempt property equity and those payments become part of the restructured plan, or the borrower’s disposable income, whichever is greater.
Although the exemptions in Florida provide ample protection for borrowers, there are residency requirements placed on them. You only have to live in Florida for a minimum of 180 days before you file bankruptcy in the state. However, to take advantage of the exemptions, you must have lived in Florida for at least 730 days before you file your bankruptcy petition. If you have not lived in the state for this amount of time, the exemptions in the state you moved from will apply.
Some of the most common exemptions under state law include:
- Up to $1,000 in personal property such as art, furniture, and electronics, if the homestead exemption is used
- Up to $4,000 in personal property if the homestead exemption is not used
- Health savings, education savings, and hurricane savings
- Prescription health aids
- Prepaid health savings account deposits and medical savings accounts
- Tax refunds and credits
- Up to $1,000 in motor vehicle equity, which increases if a married couple files jointly
- Up to $750 in wages for the head of the family, or 75 parent of the federal minimum wage, whichever is greater
The Homestead Exemption in Florida
Florida’s homestead exemption is very generous and provides more protection for borrowers in Florida than most other states in the country. There is no limit placed on the amount of equity in your home, as long as the property is not more than one-half acre in size when it is located in a municipality, or is not more than 160 acres in another area. The law also applies to any property other than a residence if the premises fall under the homestead protection.
State law requires you to have owned the property for 1,215 days prior to filing your petition. If you have not owned the property for that amount of time, federal law will apply.
How Often Can You File Bankruptcy in Plantation?
The bankruptcy system in Florida is designed to help people struggling with debt they simply cannot afford. Still, the system also does not want to encourage people to continuously take on debt they cannot pay just so they can keep filing bankruptcy. As such, once you have filed successfully, you will have to wait a certain amount of time before you can file again.
If your debt was discharged in a Chapter 7 bankruptcy, you cannot file again for eight years. The clock on that timeline starts ticking on the day you filed the previous bankruptcy, not the date your debt was discharged. If you previously filed Chapter 13 bankruptcy, you must wait at least two years from the date you filed initially until you can file again. Due to the fact that repayment plans in Chapter 13 bankruptcy extend between three and five years, most borrowers can file Chapter 13 bankruptcy again as soon as they have completed the repayment plan.
Contact Our Bankruptcy Lawyers in Plantation Today
Making the decision to file Chapter 7 or Chapter 13 is difficult enough. Do not make it harder on yourself by filing on your own and risking a denial in your case. At Loan Lawyers, our Plantation bankruptcy lawyers can help you navigate the process and will prepare you for every step of the way so you have the best chance of getting the discharge you need. Call us now at (954) 523-4357 or reach out to us online to schedule a free review of your case.
