Bankruptcy is generally a last resort for people who are struggling to deal with debt. It allows people or companies to eliminate or repay some or all of their debt and start fresh without the burden of overwhelming debt.
The right to file for bankruptcy comes from federal law, and while it might not be ideal, it can be a good decision for many people. If you’re struggling with debt and you think bankruptcy might be the best option for you, don’t hesitate to reach out to us. At Crary Buchanan, we have some of the best bankruptcy lawyers in Stuart, FL.
Most Common Types of Bankruptcy In Florida
Chapter 7 is a legal procedure that allows a person’s debts to be discharged after their non-exempt assets have been liquidated. The first step to filing for Chapter 7 bankruptcy is to file a petition with the appropriate bankruptcy court. Additionally, you must file the following items with the court:
1. Schedule of assets and liabilities
2. A schedule of monthly income and expenditures
3. A statement of your financial affairs, and
4. A schedule that includes your executor contracts and unexpired leases
If you are an individual debtor and your debt primarily consists of consumer debt, you must also file a certificate of credit counseling.
To file for Chapter 7 bankruptcy in Florida, a person must either be a permanent resident of Florida or own property in Florida. One of the primary purposes of Chapter 7 is to allow people to start fresh and get back on their feet. In 2005, amendments to the Bankruptcy Code implemented a means test to ensure that wealthier individuals don’t take advantage of the system and have their debts discharged unnecessarily. While it’s still possible for wealthier individuals to file for Chapter 7, the amendment has made it more difficult.
The Means Test
When filing for Chapter 7 bankruptcy in Florida, there is a presumption of abuse that you have to overcome to file for bankruptcy successfully. To overcome this presumption, you have to pass the Bankruptcy Means Test. You can do this in the following ways:
First, you can show that your income is below the median income in Florida. The income limit changes depending on your family size. For example, as of May 1, 2021, if you’re single and live alone, the monthly limit is $4,431.83, and the annual limit is $53,182. In contrast, if your family size is 5, the monthly limit is $7,850.25, and the annual limit is $94,203.
If, however, you make too much money to qualify automatically, the second way to pass the Means Test is to go through a more rigorous process. To qualify this way, you will be comparing your monthly income to your household expenses. If you don’t qualify for the Means Test based on monthly income, it’s probably a good idea to hire bankruptcy lawyers in Stuart, FL, who can help you determine your eligibility.
If you aren’t eligible for Chapter 7 bankruptcy, you can look into other types as well.
What Happens If You’re Eligible For Chapter 7?
After you file your petition with the court, the trustees will hold a meeting of creditors, usually no more than 40 days later. You will be under oath, and the trustees and your creditors will ask you questions about your current financial situation and why you’re filing for bankruptcy. It is rare, however, for a person’s creditors to attend, so it may end up just being the trustees. This is usually the only meeting or court attendance you will have to appear for.
Chapter 13 bankruptcy is also known as Adjustments of Debts of an Individual with Regular Income. It is also referred to as a reorganization. Generally, individuals file for Chapter 13 bankruptcy in an attempt to catch up on a missed mortgage and car payments.
If you successfully file for Chapter 13, your debts are not immediately discharged like they are under Chapter 7. The goal here is to create a plan to repay your debts over the course of three to five years and then have some of your debts discharged once this goal is met. If your repayment plan meets all of the requirements, the payments you make will be distributed to creditors by a Chapter 13 trustee.
After you successfully complete your payment plan, you will have your debts discharged. While this payment plan is in effect, you are protected from lawsuits being filed against you by your creditors, and your wages cannot be garnished.
The Process of Filing For Chapter 13
The first step in filing for Chapter 13 bankruptcy is to file a petition with the court. Additionally, you are also required to file schedules, a statement of your financial affairs, and a counseling certificate. In place of filing a statement of current monthly income and the Means Test calculation, you are required to submit a statement of current monthly income and calculation of commitment period and dispensable income. You must also submit a plan proposing how and when you will pay each creditor.
Once you’ve made all payments in accordance with your approved payment plan, you are entitled to have your debts discharged. In the meantime, you are not permitted to take on any new debt without the approval of your trustee.
Debts that will not be discharged under Chapter 13 include:
2. Child support
3. Some taxes
4. Debts incurred due to death or personal injury caused by driving under the influence
5. Debts for restitution or criminal fines included in the sentencing of a crime
Any creditors who have been paid in full or in part under this plan will no longer be able to collect money or initiate any legal action going forward.
We Can Help
Being in a position where you have to file for bankruptcy can be a vulnerable and scary time. We want to do everything we can to make this process as easy as possible for you. Some of the bankruptcy laws, especially since the amendment was implemented, can be confusing. That’s where we come in.
If you need bankruptcy lawyers in Stuart, FL, we can help. Crary Buchanan is a general practice law firm dedicated to providing quality legal services in the state of Florida. Our lawyers have significant legal experience in practically every major area of the law, and many of our associates are Board Certified by the Florida Bar in their areas of expertise. That breadth of legal experience, coupled with years of history in our community, means Crary Buchanan attorneys are miles above the rest.
If you have more questions or need help with any bankruptcy matters, call 772-287-2600 or schedule a free consultation online with our easy-to-use contact form. We have successfully helped hundreds of people file for bankruptcy and get their finances back on track. You can always depend on Crary Buchanan for our honesty, hard work, experience, and trust. Call today.
The information in this blog post is provided for informational purposes only and is not intended to be legal advice. You should not decide whether or not to contact an attorney based upon the information in this blog post. No attorney-client relationship is formed, nor should any such relationship be implied. If you require legal advice, please consult with an attorney licensed to practice in your jurisdiction.