If you are a Florida resident interested in learning more about your bankruptcy options, you’ve landed in the right place.
The Two Main Types of Florida Bankruptcy
There are two main bankruptcy options and they are referred to as Chapter 7 and Chapter 13, their respective chapter numbers in the Florida Bankruptcy Code. Chapter 7 bankruptcy is, by far, the most preferred bankruptcy choice for Florida residents when they are interested in getting rid of their debt without the worry of paying it back.
Chapter 7 Bankruptcy
The most attractive aspect of Chapter 7 Bankruptcy in Florida is that you get a “fresh start” and wipe out all of your debt. A trustee will collect all of your assets and sell all of them except for those that are exempt. Afterwards, the trustee will provide you with all of the proceeds which you will use to pay your creditors (the trustee will collect a fee).
It’s important to know that certain items can’t be discharged through a Chapter 7 Bankruptcy including fraudulent debts, certain taxes, child support and student loans. This type of bankruptcy is most often used by Florida residents who have very few assets and large credit card bills.
If you want to keep secured debts such as your house or car, you must sign a “Reaffirmation Agreement” which means you can’t bankrupt that debt again for eight years. To keep these items, you must make sure the payments are up-to-date and not behind.
Chapter 13 Bankruptcy
The other type of bankruptcy in Florida is known as Chapter 13 Bankruptcy. The debtor creates a three to five-year repayment plan and proposes it to his or her creditors. This plan is to be paid by the individual’s future income. It is also used to pay tax arrears, stop interest from growing on your tax debt, keep non-exempt property and much more. Chapter 13 Bankruptcy is a good option if you feel that you can stick to your payment plan as allows you to pay your creditors back via a bankruptcy court-approved payment plan.
If you’re a Florida resident who has a regular income and the amount repaid to creditors is, at least, as much as the creditor would have received under a Chapter 7 Bankruptcy, this could be the option for you.